Chicago Computing – Total Costs
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Computing Corporation manufactures two remote Internet communication devices:
Personal and DeLuxe. Below is the information relative to their costs:
|
Name of Pool |
Dollars in Pool |
No. of Drivers |
Driver |
|
Purchasing |
$1,000,000 |
10,000 |
Purch. |
|
Soldering |
500,000 |
100,000 |
Inches |
|
General |
250,000 |
40,000 |
Labor |
|
$1,750,000 |
Labor rate is $20.00
per hour.
Following
is information relative to the two products:
|
Description |
Personal |
DeLuxe |
|
Direct |
500,000 |
800,000 |
|
Number |
10,000 |
5,000 |
|
Purchase |
6,000 |
4,000 |
|
Inches |
50,000 |
50,000 |
|
Direct |
25,000 |
15,000 |
Required:
- Compute the
total cost of making the personal device and the deluxe device using the
single driver approach with labor hours being the cost driver. Also, compute the unit cost of each
device. - Compute the
total cost of making the personal device and the deluxe device using the
ABC approach. Also, compute the unit cost of each device. - What are the
three environmental factors that normally exist where a company is using
ABC costing? - Discuss some of
the reasons firms have not adopted ABC costing.
