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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 | $ | 40,000 | 5,000 | DLHs |
Purchase orders | Number of orders | $ | 6,400 | 3,200 | orders |
Material receipts | Number of receipts | $ | 11,700 | 900 | receipts |
Relay assembly | Number of relays | $ | 24,200 | 2,200 | relays |
General factory | Machine-hours | $ | 380,000 | 38,000 | 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) | 2,250 | 550 | 1,750 | 450 |
Purchase orders (orders) | 350 | 700 | 800 | 1,350 |
Materials receipts (receipts) | 600 | 111 | 189 | 0 |
Relay assembly (relays) | 310 | 310 | 330 | 1,250 |
General factory (MHs) | 15,500 | 4,200 | 3,800 | 14,500 |
Using the ABC data, determine the total amount of overhead cost assigned to each product.
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