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] Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for
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Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools:
Activity Cost Pool | Activity Measure | Expected Overhead Cost | Expected Activity | |
---|---|---|---|---|
Labor-related | Direct labor-hours | $ 284,000 | 35,500 | DLHs |
Purchase orders | Number of orders | $ 6,790 | 194 | orders |
Parts management | Number of part types | $ 71,340 | 82 | part types |
Board etching | Number of boards | $ 57,900 | 1,930 | boards |
General factory | Machine-hours | $ 229,900 | 20,900 | MHs |
Required:
1. Compute the activity rate for each of the activity cost pools.
2. The expected activity for the year was distributed among the companys four products as follows:
Activity Cost Pool | Expected Activity | |||
---|---|---|---|---|
Product A | Product B | Product C | Product D | |
Labor-related (DLHs) | 3,000 | 22,800 | 3,900 | 5,800 |
Purchase orders (orders) | 43 | 20 | 48 | 83 |
Parts management (part types) | 22 | 15 | 32 | 13 |
Board etching (boards) | 530 | 750 | 650 | 0 |
General factory (MHs) | 3,600 | 7,300 | 3,900 | 6,100 |
Using the ABC data, determine the total amount of overhead cost assigned to each product.
Compute the activity rate for each of the activity cost pools.
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