Question
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
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 | $ 400,000 | 40,000 | DLHs |
Purchase orders | Number of orders | $ 11,150 | 223 | orders |
Parts management | Number of part types | $ 82,820 | 101 | part types |
Board etching | Number of boards | $ 73,800 | 1,640 | boards |
General factory | Machine-hours | $ 279,500 | 21,500 | 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) | 6,700 | 23,300 | 4,300 | 5,700 |
Purchase orders (orders) | 63 | 39 | 36 | 85 |
Parts management (part types) | 37 | 15 | 38 | 11 |
Board etching (boards) | 300 | 760 | 580 | 0 |
General factory (MHs) | 3,900 | 8,800 | 2,500 | 6,300 |
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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Using the ABC data, determine the total amount of overhead cost assigned to each product.
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