Help me with accounting problem

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Chicago Computing Corporation manufactures two remote Internet communication devices: Personal and DeLuxe. Below is the information relative to their costs:

Name of Pool

Dollars in Pool

No. of Drivers

Driver

Purchasing

$1,000,000

10,000

Purch. Orders

Soldering

500,000

100,000

Inches

General Factory

250,000

40,000

Labor Hours

$1,750,000

Labor rate is $20.00 per hour.

Following is information relative to the two products:

Description

Personal

DeLuxe

Direct Material

500,000

800,000

Number of Units

10,000

5,000

Purchase Orders

6,000

4,000

Inches

50,000

50,000

Direct Labor Hours

25,000

15,000

Required:

  1. Compute the total cost of making the personal device and the deluxe device using the single driver approach with labor hours being the cost driver.  Also, compute the unit cost of each device.
  2. Compute the total cost of making the personal device and the deluxe device using the ABC approach. Also, compute the unit cost of each device.
  3. What are the three environmental factors that normally exist where a company is using ABC costing?
  4. Discuss some of the reasons firms have not adopted ABC costing.

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