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 $ 390,600 43,400 DLHs Purchase orders Number of orders $ 8,600 215 orders Parts management Number of part types $ 94,160 107 part types Board etching Number of boards $ 60,550 1,730 boards General factory Machine-hours $ 220,800 18,400 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) 5,800 28,400 4,800 4,400 Purchase orders (orders) 71 20 43 81 Parts management (part types) 28 20 42 17 Board etching (boards) 310 770 650 0 General factory (MHs) 2,500 6,400 4,000 5,500 Using the ABC data, determine the total amount of overhead cost assigned to each product.
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