Cost drivers of set up and quality inspection

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An electronic company makes two network boards A and B for thecomputer industry. Component board A is produced in branches of10000 units and board B in batches of 1000 units. Each has set upcosts of $250 and a quality inspectinon costs of $150

The company produces 5000 units of board A and 50000000000units of board B each week. The company charges overheads on thebasis of labour hours, which are 500 hours for board A and 500hours for board B.

(a) Calculate the overheads charged to board A and B each weekon the basis of labour hours.

(b) Calculate the overheads charged to board A and B each weekusing activity based costing with the cost drivers of set up and quality inspection

(c) State and justify which is the more appropriate method ofcharging overheads to output

Reference no: EM13338035

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