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X company makes a single product, dog shampoo that it sells to the Tesco Lotus. The company has a simple Activity-based Costing (ABC) system that
X company makes a single product, dog shampoo that it sells to the Tesco Lotus. The company has a simple Activity-based Costing (ABC) system that it uses for internal decision making. The company has two overhead departments as follow: $300,000 Manufacturing Overhead Selling & Administrative Overhead Total Overhead Costs $200,000 $500,000 The company's ABC system has the following activity cost pools and activity measures: Activity Measure Number of Units Activity Cost Pool Assembling Units Processing Orders Supporting Customers Other Number of Orders Number of Customers Not Applicable Costs assigned to the "Other" activity cost pool have no activity measure; they consist of the costs unused capacity and organization-sustaining costs-neither of which are assigned to orders, customers, or the product. At-lite Industries distributes the costs of manufacturing overhead and of selling and administrative overhead to the activity cost pools based on employee interviews, the results of which are reported below: Assembling Processing Supporting Other Total Units Orders Customers 20% Manufacturing Overhead 45% 25% 10% 100% Selling & Administrative overhead 30% 30% 20% 20% 100% Total Activity 1,000 Units 250 orders 100 Customers Required: 1. Perform the first-stage allocation of overhead costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. XYZ Industries is on of At-lite Industries customers. Last year, XYZ Industries ordered light bulb four (4) different times. XYZ industries ordered a total of 160 light bulb during the year. Construct a table to compute the ABC cost attribute to XYZ Industries
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