Sultan Company uses an activity-based costing system. At the beginning of the year, the company made...

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

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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