EXERCISE 4-5 Assigning Overhead to Products in ABC LO4-2,LO4-3 Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Activity Cost Pool Labor-related Activity Measure Expected Overhead Cost Expected Activity Direct labor-hours $156,000 Purchase orders Number of orders $11,000 26,000 DLHS 220 orders Parts management Number of part types $80,000 100 part types Board etching Number of boards $90,000 2,000 boards General factory Machine-hours $180,000 20,000 MHs Required: 1. Compute the activity rate for each of the activity cost pools. 2. The expected activity for the year was distributed among the company's four products as follows: Expected Activity Activity Cost Pool Product A Product B Product C Product D Labor-related (DLHs) 6,000 11,000 4,000 Purchase orders (orders) 60 30 40 5,000 90 Parts management (part types) 30 15 40 15 Board etching (boards) 500 900 600 0 General factory (MHS) 3,000 8.000 3,000 6.000 Using the ABC data, determine the total amount of overhead cost assigned to each product.
EXERCISE 4-5 Assigning Overhead to Products in ABC LO4-2,LO4-3 Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Activity Cost Pool Labor-related Activity Measure Expected Overhead Cost Expected Activity Direct labor-hours $156,000 Purchase orders Number of orders $11,000 26,000 DLHS 220 orders Parts management Number of part types $80,000 100 part types Board etching Number of boards $90,000 2,000 boards General factory Machine-hours $180,000 20,000 MHs Required: 1. Compute the activity rate for each of the activity cost pools. 2. The expected activity for the year was distributed among the company's four products as follows: Expected Activity Activity Cost Pool Product A Product B Product C Product D Labor-related (DLHs) 6,000 11,000 4,000 Purchase orders (orders) 60 30 40 5,000 90 Parts management (part types) 30 15 40 15 Board etching (boards) 500 900 600 0 General factory (MHS) 3,000 8.000 3,000 6.000 Using the ABC data, determine the total amount of overhead cost assigned to each product.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:EXERCISE 4-5 Assigning Overhead to Products in ABC LO4-2,LO4-3
Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the
following estimates of cost and activity for its five activity cost pools:
Activity Cost Pool
Labor-related
Activity Measure
Expected Overhead Cost
Expected Activity
Direct labor-hours
$156,000
Purchase orders
Number of orders
$11,000
26,000 DLHS
220 orders
Parts management
Number of part types
$80,000
100 part types
Board etching
Number of boards
$90,000
2,000 boards
General factory
Machine-hours
$180,000
20,000 MHs
Required:
1. Compute the activity rate for each of the activity cost pools.
2. The expected activity for the year was distributed among the company's four products as follows:
Expected Activity
Activity Cost Pool
Product A
Product B
Product C
Product D
Labor-related (DLHs)
6,000
11,000
4,000
Purchase orders (orders)
60
30
40
5,000
90
Parts management (part types)
30
15
40
15
Board etching (boards)
500
900
600
0
General factory (MHS)
3,000
8.000
3,000
6.000
Using the ABC data, determine the total amount of overhead cost assigned to each product.
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