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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 |
Required:
1. Compute the activity rate for each of the activity cost pools.
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