Question
Problem 4-16 Part 2 2. Management is considering using activity-based costing to assign manufacturing overhead cost to products. The activity-based costing system would have the
Problem 4-16 Part 2
2. Management is considering using activity-based costing to assign manufacturing overhead cost to products. The activity-based costing system would have the following four activity cost pools:
| Activity Cost Pool | Activity Measure | Estimated Overhead Cost | |
| Maintaining parts inventory | Number of part types | $ | 225,000 |
| Processing purchase orders | Number of purchase orders | 182,000 | |
| Quality control | Number of tests run | 45,000 | |
| Machine-related | Machine-hours | 460,000 | |
| $ | 912,000 | ||
| Expected Activity | |||
| Activity Measure | LEC 40 | LEC 90 | Total |
| Number of part types | 600 | 900 | 1,500 |
| Number of purchase orders | 2,000 | 800 | 2,800 |
| Number of tests run | 500 | 1,750 | 2,250 |
| Machine-hours | 1,600 | 8,400 | 10,000 |
Determine the activity rate for each of the four activity cost pools.
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Auditing and Assurance services an integrated approach
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
16th edition
978-0134075754, 134075757, 134065824, 978-0134065823
