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 $ 269,100 29,900 DLHs Purchase orders Number of orders $ 11,000 220 orders Parts management Number of part types $ 78,440 106 part types Board etching Number of boards $ 85,050 1,890 boards General factory Machine-hours $ 242,400 20,200 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 company’s four products as follows:_____.
Expected Activity Activity Cost Pool Product A Product B Product C Product D Labor-related (DLHs) 7,500 13,400 3,800 5,200 Purchase orders (orders) 66 30 32 92 Parts management (part types) 29 19 47 11 Board etching (boards) 580 750 560 0 General factory (MHs) 2,600 7,300 3,700 6,600 Using the ABC data, determine the total amount of overhead cost assigned to each product.

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jepessoa jepessoa · Answer 1 · 2020-10-11T16:52:35+02:00

Answer:

Activity Activity Expected Expected

cost pool measure overhead cost activity

Labor-related Direct labor-hours $269,100 29,900 DLHs

Purchase orders Number of orders $11,000 220 orders

Parts management # of part types $78,440 106 part types

Board etching # of boards $85,050 1,890 boards

General factory Machine-hours $242,400 20,200 MHs

1) cost per direct labor hour = $269,100 / 29,900 = $9

cost per order = $11,000 / 220 = $50

cost per number of parts = $78,440 / 106 = $740

cost per # of boards = $85,050 / 1,890 = $45

cost per machine hour = $242,400 / 20,200 = $12

Expected Activity

Activity Cost Pool Product A Product B Product C Product D

Labor-related (DLHs) 7,500 13,400 3,800 5,200

Purchase orders (orders) 66 30 32 92

Parts management 29 19 47 11

Board etching (boards) 580 750 560 0

General factory (MHs) 2,600 7,300 3,700 6,600

2) Using the ABC data, determine the total amount of overhead cost assigned to each product.

overhead cost assign to product A = ($9 x 7,500) + ($50 x 66) + ($740 x 29) + ($45 x 580) + ($12 x 2,600) = $149,560

overhead cost assign to product B = ($9 x 13,400) + ($50 x 30) + ($740 x 19) + ($45 x 750) + ($12 x 7,300) = $257,510

overhead cost assign to product C = ($9 x 3,800) + ($50 x 32) + ($740 x 47) + ($45 x 560) + ($12 x 3,700) = $140,180

overhead cost assign to product D = ($9 x 5,200) + ($50 x 92) + ($740 x 11) + ($45 x 0) + ($12 x 6,600) = $138,740