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ACME Incorporated utilizes an Activity-Based Costing system to assign overhead costs to work. The company has identified the following activity cost pools and total activity
ACME Incorporated utilizes an Activity-Based Costing system to assign overhead costs to work. The company has identified the following activity cost pools and total activity rates for the year 2022. In 2022, Wang, one of ACME's customers, had 1 order for 6 units at a selling price of $2,000 per unit. This order required 12 design hours to deliver the units. In addition, the direct material cost $750 per unit and direct labour was $900 per unit. Required: 1. Compute the activity rates for the Activity-Based Costing system. (3 marks) 2. Calculate the total overhead cost that should be assigned to the Wang order. ( 3 marks) 3. Calculate the customer margin for the customer Wang. (4 marks) 4. State two limitations of Activity-Based Costing. (1 mark)
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