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?

---

Definitions:

Ambiguous Messages

Communications that can be interpreted in multiple ways due to unclear or vague language, leading to confusion or misunderstanding.

Redundancies

The presence of duplicate elements or unnecessary repetitions in content or processes.

Formal Report

A document that presents information in a structured format for analysis and provides specific recommendations for future actions.

Policy Implementation

The process of putting into effect or enacting policies decided by an organization or government.