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Allocate overhead costs using activity rates for different cost pools. Activity Cost ($) Activity Driver Driver Quantity Order processing $60,000 Number of orders 1,200 orders
Allocate overhead costs using activity rates for different cost pools.
Activity | Cost ($) | Activity Driver | Driver Quantity |
Order processing | $60,000 | Number of orders | 1,200 orders |
Customer support | $80,000 | Hours of support | 8,000 hours |
Inventory management | $100,000 | Number of SKUs | 500 SKUs |
Requirements:
Calculate the activity rate for each cost pool using ABC.
Allocate overhead costs to products A, B, and C based on activity usage.
Discuss the benefits of using ABC compared to traditional costing methods in the retail industry.
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