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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 | $ | 380,000 | 38,000 | DLHs | ||
Purchase orders | Number of orders | $ | 11,935 | 217 | orders | ||
Parts management | Number of part types | $ | 79,500 | 106 | part types | ||
Board etching | Number of boards | $ | 93,000 | 1,860 | boards | ||
General factory | Machine-hours | $ | 240,500 | 18,500 | 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:
Expected Activity | ||||||||||||
Activity Cost Pool | Product A | Product B | Product C | Product D | ||||||||
Labor-related (DLHs) | 5,400 | 24,700 | 3,800 | 4,100 | ||||||||
Purchase orders (orders) | 51 | 35 | 48 | 83 | ||||||||
Parts management (part types) | 35 | 14 | 42 | 15 | ||||||||
Board etching (boards) | 590 | 730 | 540 | 0 | ||||||||
General factory (MHs) | 2,600 | 8,600 | 2,000 | 5,300 | ||||||||
Using the ABC data, determine the total amount of overhead cost assigned to each product.
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