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 | $ | 156,000 | 26,000 | DLHs | ||
Purchase orders | Number of orders | $ | 11,000 | 220 | orders | ||
Parts management | Number of part types | $ | 80,000 | 100 | part types | ||
Board etching | Number of boards | $ | 90,000 | 2,000 | boards | ||
General factory | Machine-hours | $ | 180,000 | 20,000 | 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) | 6,000 | 11,000 | 4,000 | 5,000 | ||||||||
Purchase orders (orders) | 60 | 30 | 40 | 90 | ||||||||
Parts management (part types) | 30 | 15 | 40 | 15 | ||||||||
Board etching (boards) | 500 | 900 | 600 | 0 | ||||||||
General factory (MHs) | 3,000 | 8,000 | 3,000 | 6,000 | ||||||||
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.
Compute the activity rate for each of the activity cost pools.
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- Required 1
- Required 2
Using the ABC data, determine the total amount of overhead cost assigned to each product.
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