• The Blossum Company has an activity based costing system with three activity cost pools-Design, Marketing, and Other. The companys overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already.
• Costs in the Design cost pool are assigned to products based on Direct Labor Hours (DLHs) and the costs in the Marketing cost pool are assigned to products based on the number of cases. Costs in the other cost pool are not assigned to products.
• Required
• (1) Calculate activity rates for each activity cost pool using ABC
• (2) Determine the amount of overhead cost that would be assigned to Product Tulips using ABC
• (3) Determine the product margin for Product Tulips using ABC

Activity Based Costing (ABC) Data Sets Activity Cost Pools (in dollars)

Category Design Marketing Other Total

Depreciation $30,000 $8,000 $20,000 $58,000

Indirect Labor $5,000 $3,000 $4,000 $12,000

Total $35,000 $11,000 $24,000 $70,000

Category DLHs Cases

Product Tulips 2,500 600

Product Roses 9,500 2,400

Total 12,000 3,000

Activity Cost Pools (in dollars)

Category Tulips Roses

Total Sales 250,000 280,000

Total Direct Materials 60,000 45,000

Total Direct Labor 48,000 98,000