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Problem 4 - 1 8 Contrasting Activity - Based Costing and Conventional Product Costing [ LO 4 - 2 , LO 4 - 3 ,
Problem Contrasting ActivityBased Costing and Conventional Product Costing LO LO LO
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Adria Company recently implemented an activitybased 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
Laborrelated Direct laborhours $ DLHs
Purchase orders Number of orders $ orders
Material receipts Number of receipts $ receipts
Relay assembly Number of relays $ relays
General factory Machinehours $ MHs
Problem Part
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
Laborrelated DLHs
Purchase orders orders
Materials receipts receipts
Relay assembly relays
General factory MHs
Using the ABC data, determine the total amount of overhead cost assigned to each product.
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