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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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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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