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In: Accounting

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 3 years ago
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