Gibson Electronics produces video games in three market categories: commercial, home, and miniature. Gibson has traditionally
allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently
implemented an ABC system when it installed computercontrolled assembly stations that rendered the traditional costing system
ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers:
Additional data for each of the product lines follow:
Required
a Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line
using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines.
b Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs.
Determine the combined cost of all three product lines.
Note: For all requirements, round intermediate calculations for allocation rates to decimal places and all other calculations to
the nearest whole dollar. Round "Cost per Unit" to decimal places. Round your answers for "Total Cost" to the nearest whole
dollar amount.
