Question

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Adria Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the company’s five activity cost pools:

Activity Cost Pool	Activity Measure	Expected Overhead Cost		Expected Activity
Labor-related	Direct labor-hours	$	42,500	8,500	DLHs
Purchase orders	Number of orders	$	5,600	2,800	orders
Material receipts	Number of receipts	$	10,000	1,000	receipts
Relay assembly	Number of relays	$	14,400	1,800	relays
General factory	Machine-hours	$	245,000	35,000	MHs

Required information

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)	2,950	400	4,250	900
Purchase orders (orders)	200	550	1,120	930
Materials receipts (receipts)	450	190	360	0
Relay assembly (relays)	280	280	540	700
General factory (MHs)	14,750	3,000	3,500	13,750

   

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

Answer 1

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