Problem 3-18A Contrasting Activity-Based Costing and Conventional Product Costing [LO3-2, LO3-3, LO3-4]

[The following information applies to the questions displayed below.]

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

$

57,000

9,500

DLHs

Purchase orders

Number of orders

$

13,500

4,500

orders

Material receipts

Number of receipts

$

12,000

1,000

receipts

Relay assembly

Number of relays

$

28,000

3,500

relays

General factory

Machine-hours

$

252,000

36,000

MHs

Problem 3-18A Part 1

Required:

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

Activity Cost Pool	Activity Rate
Labor-related		per DLH
Purchase orders		per order
Material receipts		per receipt
Relay assembly		per relay
General factory		per MH

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Problem 3-18A Part 2

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)	2,650	750	5,700	400
Purchase orders (orders)	350	600	2,475	1,075
Materials receipts (receipts)	330	160	510	0
Relay assembly (relays)	220	220	1,575	1,485
General factory (MHs)	13,250	6,900	3,600	12,250

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

Product A
Product B
Product C
Product D

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