PoseiDon Inc. (PDI) recently started operations to obtain a share of the growing golfing market....
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Accounting
PoseiDon Inc. (PDI) recently started operations to obtain a share of the growing golfing market. PDI manufactures two models of specialty drivers: the Thunderbolt model and the Earthquake model. The company was formed as a partnership by two professional engineers and a professional golfer, none of whom had any accounting experience. The business has been very successful, and to cope with the increased level of activity, the partners have hired a professional accountant as their controller. One of the first improvements the controller wants is an update of the costing system, changing from a single overhead application rate using direct labour-hours to activity-based costing. The controller has identified the following three activities as cost drivers, along with the related cost pools:
Model
Number of Materials Requisitions
Number of Product Inspections
Number of Orders Shipped
Thunderbolt
320
100
132
Earthquake
480
205
59
Total costs in the cost pool
$
360,000
$
51,850
$
59,210
Required:
Using ABC, prepare a schedule that shows the allocation of the costs of each cost pool for each model.
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