Question

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	$	174,000		34,800		DLHs
Purchase orders	Number of orders	$	7,200		240		orders
Parts management	Number of part types	$	66,500		95		part types
Board etching	Number of boards	$	64,800		1,620		boards
General factory	Machine-hours	$	115,200		14,400		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)		6,800			18,800			4,300			4,900
Purchase orders (orders)		72			28			41			99
Parts management (part types)		35			13			34			13
Board etching (boards)		330			780			510			0
General factory (MHs)		2,300			6,000			2,100			4,000

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

• Required 1
• Required 2

Compute the activity rate for each of the activity cost pools.

	Activity Cost Pool Activity Rate Labor-related $5 per DLH Purchase orders $30 per order Parts management per part type Board etching $40 per board General factory $8 per MH

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

	Overhead Cost Assigned Activity Cost Pool Product A Product B Product C Product D Labor-related (DLHs) Purchase orders (orders) Parts management (part types) Board etching (boards) General factory (MHs) Total $0 $0 $0 $0

Answer 1