ABX Company Produces Two Types of Computer Speakers Required:
1)Allocate the Inspection Cost Between the Two Products Assuming

question 54

Essay

ABX Company produces two types of computer speakers.The Prestige line is made to provide excellent sound for the most demanding applications.The Standard line is geared toward workplace use and delivers average performance.During its most recent accounting period,the company incurred $50,000 of inspection costs.Its production activities were classified into four cost centers,unit-level,batch-level,product-level,and facility-level.The following cost and cost driver information is provided for the unit-level and batch-level cost centers: $$\begin{array} { | l | r | r | } \hline \text { Cost-Center: } & \text { Unit-Level } & \text { Batch-Level } \\\hline & \\\hline \text { Cost Driver. } &\text { Number of direct labor hours } & \text { Number of batches } \\\hline \text { Prestige Product } & 4,000 & 15 \\\hline \text { Standard Product } &\underline { 6,000 } &5 \\\hline{ \text { Totals } } & \underline { 10,000 } &20 \\\hline & &\end{array}$$
Required:
1)Allocate the inspection cost between the two products assuming the inspection cost is driven by a)only unit-level activities;b)only batch-level activities.
2)How should managers of the company determine which allocation is more appropriate?

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Definitions:

Person-Role Conflict

Occurs when there is a discrepancy between the expectations of a role and the personal values, beliefs, or needs of the individual occupying that role.

Differentiation Ambiguity

The uncertainty or confusion arising from the unclear distinction between roles, responsibilities, or identities within an organization or group.

Role Ambiguity

A situation where an individual lacks clear or sufficient information regarding their role, responsibilities, or expectations within a group or organization.

Interrole Conflict

A psychological conflict arising when the expectations of different roles an individual plays are in opposition.