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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 | $ | 27,020 | 1,930 | DLHs |
Purchase orders | Number of orders | $ | 2,160 | 540 | orders |
Product testing | Number of tests | $ | 4,575 | 305 | tests |
Template etching | Number of templates | $ | 780 | 30 | templates |
General factory | Machine-hours | $ | 68,600 | 9,800 | 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) | 625 | 105 | 600 | 600 |
Purchase orders (orders) | 100 | 140 | 130 | 170 |
Product testing (tests) | 170 | 55 | 0 | 80 |
Template etching (templates) | 0 | 16 | 10 | 4 |
General factory (MHs) | 3,200 | 2,300 | 1,600 | 2,700 |
Using the ABC data, determine the total amount of overhead cost assigned to each product
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