Context-sensitive nature of activity classification Pinson Company makes two types of circuit boards. One is a high-caliber board designed to accomplish the most demanding tasks; the other is a low-caliber board designed to provide limited service at an affordable price. During its most recent accounting period, Pinson incurred $80,000 of inspection cost. When Pinson recently established an activity-based costing system, its activities were classified into four categories. Categories and appropriate cost drivers follow.         Direct Number Number Number   Labor Hours of Batches of Inspectors of Square Feet High caliber 4,000 25 3 40,000 Low caliber Totals 16,000 20,000 15 40 2 5 60,000 100,000 Required Allocate the inspection cost between the two products assuming that it is driven by (a) unit-level activities, (b) batch-level activities, (c) product-level activities, or (d) facility-level activities.

Intermediate Algebra
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Author:Lynn Marecek
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Chapter12: Sequences, Series And Binomial Theorem
Section12.3: Geometric Sequences And Series
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Context-sensitive nature of activity classification

Pinson Company makes two types of circuit boards. One is a high-caliber board designed to accomplish the most demanding tasks; the other is a low-caliber board designed to provide limited service at an affordable price. During its most recent accounting period, Pinson incurred $80,000 of inspection cost. When Pinson recently established an activity-based costing system, its activities were classified into four categories. Categories and appropriate cost drivers follow.

 

 

 

 

Direct

Number

Number

Number

 

Labor Hours

of Batches

of Inspectors

of Square Feet

High caliber

4,000

25

3

40,000

Low caliber Totals

16,000 20,000

15 40

2 5

60,000 100,000

Required

Allocate the inspection cost between the two products assuming that it is driven by (a) unit-level activities, (b) batch-level activities, (c) product-level activities, or (d) facility-level activities.

 

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