Adria Company recently implemented an activity-based costing system. At the beginning of the year, management m the following estimates of cost and activity in the company's five activity cost pools: Activity Cost Pool Labor-related Purchase orders Material receipts Relay assembly General factory Problem 4-18 Part 1 Activity Cost Pool Labor-related Required: 1. Compute the activity rate for each of the activity cost pools. Purchase orders Material receipts Relay assembly General factory Activity Rate Activity Measure Direct labor-hours Number of orders Number of receipts. Number of relays Machine-hours per DLH per order per receipt per relay per MH Expected Overhead Cost $ 34,000 $ 3,500 $ 9,000 $ 15,000 $205,000 Assessment Tool iFrame Expected Activity 8,500 DLHS 3,500 orders 900 receipts 2,500 relays 41,000 MHS

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question
100%
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
Labor-related
Purchase orders
Material receipts
Relay assembly
General factory
Problem 4-18 Part 1
Activity Cost Pool
Labor-related
Required:
1. Compute the activity rate for each of the activity cost pools.
Purchase orders
Material receipts
Relay assembly
General factory
Activity Rate
Activity
Measure
Direct labor-hours
Number of orders
Number of receipts
Number of relays
Machine-hours
per DLH
per order
per receipt
per relay
per MH
Expected
Overhead
Cost
$ 34,000
$ 3,500
$ 9,000
$ 15,000
$205,000
Assessment Tool iFrame
Expected
Activity
8,500 DLHS
3,500 orders
900 receipts
2,500 relays
41,000 MHS
Transcribed Image Text: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 Labor-related Purchase orders Material receipts Relay assembly General factory Problem 4-18 Part 1 Activity Cost Pool Labor-related Required: 1. Compute the activity rate for each of the activity cost pools. Purchase orders Material receipts Relay assembly General factory Activity Rate Activity Measure Direct labor-hours Number of orders Number of receipts Number of relays Machine-hours per DLH per order per receipt per relay per MH Expected Overhead Cost $ 34,000 $ 3,500 $ 9,000 $ 15,000 $205,000 Assessment Tool iFrame Expected Activity 8,500 DLHS 3,500 orders 900 receipts 2,500 relays 41,000 MHS
Expert Solution
Step 1 Introduction

The overhead rate is calculated as estimated overhead cost divided by estimated base activity. The overhead is applied to the production on the basis of predetermined overhead rate. 

trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
Problem 4-18 Part 2
2. The expected activity for the year was distributed among the company's four products as follows:
Activity Cost Pool
Labor-related (DLHS)
Purchase orders (orders)
Materials receipts (receipts)
Relay assembly (relays)
General factory (MHS)
Expected Activity
Product A Product B Product C Product D
2,550
250
310
200
12,750
Product A
Product B
Product C
Product D
650
500
176
200
8,300
3,400
1,750
414
1,000
8,200
1,900
1,000
0
1,100
11,750
Using the ABC data, determine the total amount of overhead cost assigned to each product.
1
Transcribed Image Text:Problem 4-18 Part 2 2. The expected activity for the year was distributed among the company's four products as follows: Activity Cost Pool Labor-related (DLHS) Purchase orders (orders) Materials receipts (receipts) Relay assembly (relays) General factory (MHS) Expected Activity Product A Product B Product C Product D 2,550 250 310 200 12,750 Product A Product B Product C Product D 650 500 176 200 8,300 3,400 1,750 414 1,000 8,200 1,900 1,000 0 1,100 11,750 Using the ABC data, determine the total amount of overhead cost assigned to each product. 1
Solution
Bartleby Expert
SEE SOLUTION
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education