Exercise 4-5 (Algo) Assigning Overhead to Products in ABC [LO4-2, LO4-3]

Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools:

Activity Cost Pool	Activity Measure	Expected Overhead Cost	Expected Activity
Labor-related	Direct labor-hours	$ 165,200	41,300	DLHs
Purchase orders	Number of orders	$ 13,020	217	orders
Parts management	Number of part types	$ 82,840	109	part types
Board etching	Number of boards	$ 92,400	1,680	boards
General factory	Machine-hours	$ 128,100	18,300	MHs

Required:

1. Compute the activity rate for each of the activity cost pools.

2. The expected activity for the year was distributed among the companys four products as follows:

Activity Cost Pool	Expected Activity
Product A	Product B	Product C	Product D
Labor-related (DLHs)	7,400	24,400	3,500	6,000
Purchase orders (orders)	60	29	45	83
Parts management (part types)	38	18	38	15
Board etching (boards)	340	700	640	0
General factory (MHs)	2,600	6,200	4,000	5,500

Compute the activity rate for each of the activity cost pools.

Using the ABC data, determine the total amount of overhead cost assigned to each product.