Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Rusties 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
Rusties 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 | $ | 25,600 | 1,600 | DLHs |
Purchase orders | Number of orders | $ | 3,090 | 515 | orders |
Product testing | Number of tests | $ | 6,030 | 335 | tests |
Template etching | Number of templates | $ | 1,430 | 55 | templates |
General factory | Machine-hours | $ | 68,400 | 7,600 | MHs |
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) | 675 | 125 | 400 | 400 |
Purchase orders (orders) | 30 | 215 | 140 | 130 |
Product testing (tests) | 200 | 60 | 0 | 75 |
Template etching (templates) | 0 | 37 | 15 | 3 |
General factory (MHs) | 2,700 | 2,000 | 1,600 | 1,300 |
Using the ABC data, determine the total amount of overhead cost assigned to each product.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started