Question
Transvaal Mining Tools Ltd. of South Africa makes specialty tools used in the mining industry. The company uses an activity-based costing system for internal decision-making
Transvaal Mining Tools Ltd. of South Africa makes specialty tools used in the mining industry. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below:
Activity Cost Pool | Activity Measure | Activity Rate | |||
Order size | Number of direct labor-hours | R 17.60 | per direct labor-hour* | ||
Customer orders | Number of customer orders | R 360 | per customer order | ||
Product testing | Number of testing hours | R 79 | per testing hour | ||
Selling | Number of sales calls | R 1,494 | per sales call | ||
* (The currency in South Africa is the rand, denoted here by R.) |
The managing director of the company would like information concerning the cost of a recently completed order for hard-rock drills. The order required 150 direct labor-hours, 18 hours of product testing, and three sales calls. |
Required: | |
a. | Prepare a report summarizing the overhead costs assigned to the order for hard-rock drills. (Omit the "R" sign in your response.) |
Activity Cost Pool | ABC Cost |
Order size | R |
Customer orders | |
Product testing | |
Selling | |
Total | R |
| |
b. | What is the total overhead cost assigned to the order? (Omit the "R" sign in your response.) |
Total overhead cost | R |
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