Durban Metal Products, Limited, of the Republic of South Africa makes specialty metal parts used in applications ranging from the cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below: Activity Cost Pool Order size Customer orders Product testing Selling Activity Measure Number of direct labor-hours Number of customer orders Number of testing hours Number of sales calls Activity Rate $ 17.00 per direct labor-hour $ 362.00 per customer order $71.00 per testing hour $ 1,489.00 per sales call
Durban Metal Products, Limited, of the Republic of South Africa makes specialty metal parts used in applications ranging from the cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below: Activity Cost Pool Order size Customer orders Product testing Selling Activity Measure Number of direct labor-hours Number of customer orders Number of testing hours Number of sales calls Activity Rate $ 17.00 per direct labor-hour $ 362.00 per customer order $71.00 per testing hour $ 1,489.00 per sales call
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Durban Metal Products, Limited, of the Republic of South Africa makes specialty metal parts used in applications ranging from the
cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for
internal decision-making purposes. The company has four activity cost pools as listed below:
Activity Cost Pool
Order size
Customer orders
Product testing
Selling
Activity Measure
Number of direct labor-hours
Number of customer orders
Number of testing hours
Number of sales calls
Activity Rate
$ 17.00 per direct labor-hour
$ 362.00 per customer order
$ 71.00 per testing hour
$ 1,489.00 per sales call
The managing director of the company would like information concerning the cost of a recently completed order for heavy-duty trailer
axles. The order required 140 direct labor-hours, 11 hours of product testing, and 5 sales calls.
Required:
What is the total overhead cost assigned to the order for heavy-duty trailer axles?
Activity Cost Pool
ABC Cost
Order size
Customer orders
Product testing
Selling
Total overhead cost
$
0
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