Question

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Rusties 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	$	19,120	2,390	DLHs
Purchase orders	Number of orders	$	1,575	525	orders
Product testing	Number of tests	$	2,430	270	tests
Template etching	Number of templates	$	800	40	templates
General factory	Machine-hours	$	46,500	7,750	MHs

Required:
1a.	Compute the activity rate for each of the activity cost pools.

Activity Cost Pool	Activity Rate
Labor-related		per DLH
Purchase orders		per order
Product testing		per test
Template etching		per template
General factory		per MH

1b

he expected activity for the year was distributed among the company’s four products as follows:

Activity Cost Pool	Expected Activity
	Product A	Product B	Product C	Product D
Labor-related (DLHs)	725	65	800	800
Purchase orders (orders)	70	145	160	150
Product testing (tests)	150	50	0	70
Template etching (templates)	0	27	10	3
General factory (MHs)	3,100	1,350	1,200	2,100

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

	Total Overhead Cost
Product A
Product B
Product C
Product D

Answer 1