Question 1

A running shoe manufacturer produces three types of shoes: traditional, minimalist, and spikes.

The company uses the following information to determine activity rates for each pool:

Cost Pool

Costs

Cost Driver

Shoe Production

$250,000

Pairs of Shoes

Shoe batches

$10,000

Batches

Shoe design

$5,000

Parts

Total

$265,000

Data concerning the three shoe products appear below:

Cost Driver

Traditional

Minimalist

Spikes

Number of pairs of shoes

20,000

15,000

5,000

Number of batches

300

500

200

Number of parts

50

70

80

What is the total amount of overhead applied to Minimalist shoes?

Not sure how to compute this.

Answer and explanations

Total amount of overhead applied to minimalist shoes = 100500

Step-by-step explanation

Cost pool

amount

driver

cost per driver

Shoe production

250000$

Pair of shoes = 40000pairs

6.25 per pair

Shoe batches

10000$

Batches = 1000 batches

10$ per batch

Shoe design

5000$

Parts = 200

25$ per part

The cost applied to minimalist would be

Shoe production = 15000 6.25 = 93750

Shoe batch = 500 10 = 5000

Show design = 70 25 = 1750

Total cost = 93750 + 5000 + 1750 = 100500

Thanks. How do you generate determine activity rates for each pool when it was not given.