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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 | $ | 23,680 | 1,480 | DLHs |
Purchase orders | Number of orders | $ | 860 | 430 | orders |
Product testing | Number of tests | $ | 6,205 | 365 | tests |
Template etching | Number of templates | $ | 1,400 | 50 | templates |
General factory | Machine-hours | $ | 39,750 | 7,950 | 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) | 700 | 180 | 300 | 300 |
Purchase orders (orders) | 20 | 150 | 160 | 100 |
Product testing (tests) | 230 | 55 | 0 | 80 |
Template etching (templates) | 0 | 32 | 10 | 8 |
General factory (MHs) | 2,400 | 1,350 | 1,500 | 2,700 |
Using the ABC data, determine the total amount of overhead cost assigned to each product.
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