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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
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 | $ | 314,000 | 31,400 | DLHs | ||
Purchase orders | Number of orders | $ | 10,215 | 227 | orders | ||
Parts management | Number of part types | $ | 98,790 | 111 | part types | ||
Board etching | Number of boards | $ | 70,800 | 1,770 | boards | ||
General factory | Machine-hours | $ | 223,600 | 17,200 | 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:
Expected Activity | ||||||||||||
Activity Cost Pool | Product A | Product B | Product C | Product D | ||||||||
Labor-related (DLHs) | 5,000 | 16,800 | 4,000 | 5,600 | ||||||||
Purchase orders (orders) | 54 | 33 | 41 | 99 | ||||||||
Parts management (part types) | 40 | 15 | 43 | 13 | ||||||||
Board etching (boards) | 460 | 700 | 610 | 0 | ||||||||
General factory (MHs) | 3,900 | 6,100 | 2,900 | 4,300 | ||||||||
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