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Rusties Company recently implemented an activity-based costing system. At the beginning of the year, management made the following |
| Activity Cost Pool | Activity Measure |
Expected Overhead Cost |
Expected Activity | ||
| Labor-related | Direct labor-hours | $ | 18,000 | 2,000 | DLHs |
| Purchase orders | Number of orders | $ | 1,050 | 525 | orders |
| Product testing | Number of tests | $ | 3,500 | 350 | tests |
| Template etching | Number of templates | $ | 700 | 28 | templates |
| General factory | Machine-hours | $ | 50,000 | 10,000 | MHs |
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5.
| Required: | |
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1. |
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 | |
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6.
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2. |
The expected activity for the year was distributed among the company’s four products as follows: |
| Activity Cost Pool | Expected Activity | |||
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| Product A | Product B | Product C | Product D | |
| Labor-related (DLHs) | 500 | 100 | 700 | 700 |
| Purchase orders (orders) | 80 | 105 | 180 | 160 |
| Product testing (tests) | 200 | 60 | 0 | 90 |
| Template etching (templates) | 0 | 14 | 10 | 4 |
| General factory (MHs) | 3,400 | 2,200 | 1,800 | 2,600 |
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Using the ABC data, determine the total amount of overhead cost assigned to each product. |
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Total Overhead Cost |
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| Product A | $ | |
| Product B | $ | |
| Product C | $ | |
| Product D | $ | |
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