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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 $ 317,600 39,700 DLHs
Purchase orders Number of orders $ 9,900 220 orders
Parts management Number of part types $ 67,890 93 part types
Board etching Number of boards $ 76,000 1,900 boards
General factory Machine-hours $ 237,600 21,600 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) 6,300 23,700 4,600 5,100
Purchase orders (orders) 70 27 40 83
Parts management (part types) 28 13 32 20
Board etching (boards) 580 700 620 0
General factory (MHs) 3,900 8,900 3,500 5,300

Using the ABC data, determine the total amount of overhead cost assigned to each product.

1. Compute the activity rate for each of the activity cost pools.

Activity Cost Pool Activity Rate
Labor-related per DLH
Purchase Orders per order
Parts Management per part type
Board etching per board
General Factory per MH

2. Using the ABC data, determine the total amount of overhead cost assigned to each product.

Overhead Cost Assigned
Activity Cost Pool Product A Product B Product C Product D
Labor-related (DLHs)
Purchase Orders (orders)
Parts Management (part types)
Board Etching (boards)
General Factory (MHs)
Total

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