# Chicago Computing – Total Costs

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.