Question

a) Smith Industries uses activity-based costing to determine the costs of its two products: A and B. The estimated total cost and expected number of activities for one of the company's activity cost pools are:

Cost	Product A	Product B
$14,000	400	300

Using activity-based costing, what is the activity rate for this activity?

b) Jones and Sons, Inc. uses activity-based costing to compute product costs. Estimated costs totaled $40,000 and expected number of activities equals 2,500 for a particular activity cost pool. The actual activity count for one of the products that Jones and Sons manufactures was 2,490. What is the amount of overhead applied for this product for this activity?

c) Bar-BQs-Are-Us has two products: A and B. The annual production level of Product A is 9,094 units. The annual production level of Product B is 15,826. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected number of activities for each of its three activity cost pools.

	Overhead cost	Expected number of activities
		Product A	Product B
Activity #1	$29,200	1000	500
Activity #2	$40,000	200	800
Activity #3	$180,000	600	5400

What is the activity rate for Activity #3?

d) For the products described in part c) find the overhead cost per unit for Product A.

Answer 1