PROBLEM 4-18 Contrasting Activity-Based Costing and Conventional Product Costing L04-29. L04-39. LO4-40 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 company's five activity cost pools: Activity Activity Cost Pool Measure Labor-related Direct labor-hours Purchase orders Number of orders Material receipts Number of receipts Relay assembly Number of relays General factory Machine-hours Expected Overhead Cost $35,000 $4.000 $10.450 $7,000 $240,000 Expected Activity 7.000 DLHS 2,000 orders 950 receipts 1,000 relays 40,000 MHS 500 350 Required: 1. Compute the activity rate for each of the activity cost pools. 2. The expected activity for the year was distributed among the company's four products as follows: Expected Activity Activity Cost Pool Product A Product B Product C Product D Labor-related (DLH5) 2,400 3,500 600 Production orders (orders) 100 800 750 Materials receipts (receipts) 208 0 Relay assembly (relays) 170 360 General factory (MH) 12,000 7.000 8,000 13,000 Using the ABC data, determine the total amount of overhead cost assigned to each product. 3. Assume that prior to implementing ABC, Adria used a conventional cost system that applied all manufacturing overhead to products based on machine-hours. Explain how the conventional cost assignments would differ from the activity-based cost assignments with respect to Product C 400 342 300 170