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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

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

+

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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