Comparing Two Products under Traditional and Activity-Based Costing Compare two projects under development by the...
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Accounting
Comparing Two Products under Traditional and Activity-Based Costing Compare two projects under development by the same company. The following are a few aspects of each products development process relevant to costs.
Product A
Requires 3840 hours of testing
Requires 5390 units of computing power
Requires 20 developer hours to implement
Product B
Requires 960 hours of testing
Requires 2310 units of computing power
Requires 80 developer hours to implement
Cost Items
Cost of Each Activity
Testing:
$30,800
Computing power:
$46,200
Developer hourly cost:
$11 per hour
Activity-Based Costing
Using the data above for products A and B, calculate the costs using activity-based costing. Allocate the costs of testing, computing, and development based on the rates of activity consumed by each product's development process. If required, in your computations, round per unit costs to the nearest cent. Round your final answers to the nearest dollar.
Cost
Activity Base
Testing
Hours of testing
Computing cost
Units of computing power
Developer cost
Development hours
Product A
Testing cost
Computing cost
Developer cost
Total cost
Product B
Testing cost
Computing cost
Developer cost
Total cost
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