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: 10 points Activity Cost Pool Labor-related Purchase orders Parts management Board etching General factory eBook Activity Measure Direct labor-hours Number of orders Number of part types Number of boards Machine-hours Expected Overhead Cost Expected Activity $ 184, 80030, 800 DLHS $ 6,900 230 orders $ 81,120 104 part types $ 45,000 1,800 boards $ 150,300 16,700 MHS Hint References 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: Product 7.000 Expected Activity Product B Product 14,300 4,400 Product D 5.100 100 Activity Cost Pool Labor-related (DLHS) Purchase orders (orders) Parts management (part types) Board etching (boards) General factory (MHS) 500 580 720 6,400 3,600 Using the ABC data, determine the total amount of overhead cost assigned to each product. < Prev 4 of 4 3 Ne Less bode 11.zip

Answer 1

Requirement 1:

Activity rate = (Overhead cost/ Expected activity)

Activity Cost Pool	Activity Measure	Expected Overhead Cost	Expected Activity		Activity rate = (Overhead cost/ Expected activity)
Labour related	direct labor hours	184,800.00	30800	DLH	6	per DLH
Purchase Orders	Number of orders	6,900.00	230	Orders	30	per Orders
Parts Management	Number of part types	81,120.00	104	Part types	780	per Part types
Board Etching	Number of boards	45,000.00	1800	boards	25	per boards
General factory	Machine Hours	150,300.00	16700	MHs	9	per MHs

Answer:

Activity Cost Pool	Activity rate
Labour related	6	per DLH
Purchase Orders	30	per Orders
Parts Management	780	per Part types
Board Etching	25	per boards
General factory	9	per MHs

Requirement 2

Statement showing "overhead cost assignment to each product'
Particulars of cost	Cost Driver	Product A	Product B	Product C	Product D	Total
Labour related	direct labor hours	42,000.00	85,800.00	26,400.00	30,600.00	184,800.00
		$6 * 7000 DLH	$6 * 14300 DLH	$6 * 4400 DLH	$6 * 5100DLH
Purchase Orders	Number of orders	1,740.00	780.00	1,380.00	3,000.00	6,900.00
		$30 * 58 orders	$30 * 26 orders	$30 * 46 orders	$30 * 100 orders
Parts Management	Number of part types	23,400.00	14,040.00	28,860.00	14,820.00	81,120.00
		$780 * 30 Part types	$780 * 18 Part types	$780 * 37 Part types	$780 * 19 Part types
Board Etching	Number of boards	12,500.00	18,000.00	14,500.00	-	45,000.00
		$ 25 * 500 boards	$ 25 * 720 boards	$ 25 * 580 boards	$ 25 * 0 boards
General factory	Machine Hours	32,400.00	57,600.00	18,900.00	41,400.00	150,300.00
		$9 * 3600 MHS	$9 * 6400 MHS	$9 * 2100 MHS	$9 * 4600 MHS

ANSWER

Particulars of cost	Cost Driver	Product A	Product B	Product C	Product D	Total
Labour related	direct labor hours	42,000.00	85,800.00	26,400.00	30,600.00	184,800.00
Purchase Orders	Number of orders	1,740.00	780.00	1,380.00	3,000.00	6,900.00
Parts Management	Number of part types	23,400.00	14,040.00	28,860.00	14,820.00	81,120.00
Board Etching	Number of boards	12,500.00	18,000.00	14,500.00	-	45,000.00
General factory	Machine Hours	32,400.00	57,600.00	18,900.00	41,400.00	150,300.00