Question
[The following information applies to the questions displayed below.] Adria Company recently implemented an activity-based costing system. At the beginning of the year, management made
[The following information applies to the questions displayed below.]
Adria Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the companys five activity cost pools: |
Activity Cost Pool | Activity Measure | Expected Overhead Cost | Expected Activity | ||
Labor-related | Direct labor-hours | $ | 42,500 | 8,500 | DLHs |
Purchase orders | Number of orders | $ | 5,600 | 2,800 | orders |
Material receipts | Number of receipts | $ | 10,000 | 1,000 | receipts |
Relay assembly | Number of relays | $ | 14,400 | 1,800 | relays |
General factory | Machine-hours | $ | 245,000 | 35,000 | MHs |
Required information
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) | 2,950 | 400 | 4,250 | 900 |
Purchase orders (orders) | 200 | 550 | 1,120 | 930 |
Materials receipts (receipts) | 450 | 190 | 360 | 0 |
Relay assembly (relays) | 280 | 280 | 540 | 700 |
General factory (MHs) | 14,750 | 3,000 | 3,500 | 13,750 |
|
Using the ABC data, determine the total amount of overhead cost assigned to each product. |
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