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Adria Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the
Adria Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the companys five activity cost pools:
Activity Cost Pool | Activity Measure | Expected Overhead Cost | Expected Activity | ||
Labor-related | Direct labor-hours | $ | 35,000 | 7,000 | DLHs |
Purchase orders | Number of orders | $ | 4,000 | 2,000 | orders |
Material receipts | Number of receipts | $ | 10,450 | 950 | receipts |
Relay assembly | Number of relays | $ | 7,000 | 1,000 | relays |
General factory | Machine-hours | $ | 240,000 | 40,000 | MHs |
2. The expected activity for the year was distributed among the companys four products as follows:
Expected Activity | ||||
Activity Cost Pool | Product A | Product B | Product C | Product D |
Labor-related (DLHs) | 2,400 | 500 | 3,500 | 600 |
Purchase orders (orders) | 100 | 350 | 800 | 750 |
Materials receipts (receipts) | 400 | 208 | 342 | 0 |
Relay assembly (relays) | 170 | 170 | 300 | 360 |
General factory (MHs) | 12,000 | 7,000 | 8,000 | 13,000 |
Using the ABC data, determine the total amount of overhead cost assigned to each product.
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