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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 company's five activity cost pools: Activity Cost Pool Labor-related Purchase orders Product testing Template etching General factory Activity Measure Direct labor-hours Number of orders Number of tests Number of templates Machine-hours Expected Overhead Cost $ 43,308 $ 2,160 $ 5,700 $ 1,950 $ 68,600 Expected Activity 2,406 DLHS 540 orders 300 tests 65 templates 9,800 MHS Exercise 4-11 Part 1 Required: 1. Compute the activity rate for each of the activity cost pools. Activity Cost Pool Labor-related Purchase orders Product testing Template etching General factory Activity Rate per DLH per order per test per template per MH 2. The expected activity for the year was distributed among the company's four products as follows: Activity Cost Pool Labor-related (DLHS) Purchase orders (orders) Product testing (tests) Template etching (templates) General factory (MHS) Product A 650 100 170 Expected Activity Product B Product C 156 800 170 120 60 0 46 15 3,000 2,000 Product D 800 150 70 3,300 1,500 Using the ABC data, determine the total amount of overhead cost assigned to each product. Total Overhead Cost Product A Product B Product C Product D
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