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Munoz Corporation uses ABC to determine product costs for external financial reports. At the beginning of the year, management made the following cost and activity
Munoz Corporation uses ABC to determine product costs for external financial reports. At the beginning of the year, management made the following cost and activity estimates in the company's five activity cost pools: Activity Cost Pool Labour related Purchase orders Product testing Template etching General factory Activity Measure Direct labour-hours Number of orders Number of tests Number of templates Machine-hours Estimated Overhead Cost $ 157,500 39,000 106, 150 272,250 563,750 $1,138,650 Expected Activity 26,250 DLHs 650 orders 1,100 tests 8,250 templates 51,250 MHs Required: 1. Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pool Labour related per DLH Purchase orders per order Product testing Template etching General factory per test per template per MH 3. The actual activity for the year was distributed among the company's four products as follows: Activity Cost Pool Labour related Purchase orders Product testing Template etching General factory Actual Activity 26,750 DLHS 640 orders 1,090 tests 8,100 templates 49,750 MHS Product A 2,700 140 330 3,240 14,925 Product B 8,000 170 175 1,620 11,940 Product C 8,900 120 145 810 4,975 Product D 7,150 210 440 2,430 17,910 a. Determine the total amount of overhead cost applied to each product. (Round intermediate calculations to 2 decimal places and final answers to nearest dollar amount.) Total Overhead Cost Product A Product B Product C Product D b. Does the total amount of overhead cost applied to the products above relate to the T-accounts in any way? Yes No
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