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 Purchase orders Parts management Board etching General factory Activity Measure Direct labor-hours Number of orders. Number of part types Number of boards Machine-hours Requir1 Required 2 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: Complete this question by entering your answers in the tabs below. Expected Overhead Cost $ 270,900 $ 11,745 $78,570 $ 72,400 $ 212,400 Activity Cost Pool Expected Activity Product B Product C Labor-related (DLHS) 13,800 Purchase orders (orders) 37 Parts management (part types) 15 Board etching (boards) 740 General factory (MHS) 6,200 Using the ABC data, determine the total amount of overhead cost assigned to each product. Product A 7,100 78 38 550 2,900 Labor-related Purchase orders Parts management Board etching General factory Compute the activity rate for each of the activity cost pools. Activity Cost Pool Activity Rate per DLH per order per part type per board per MH Expected Activity 30,100 DLHs < Required 1 261 orders 97 part types 1,810 boards 17,700 MHS 4,000 47 30 520 3,900 Required 2 > Product D 5,200 99 14 0 4,700
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 Purchase orders Parts management Board etching General factory Activity Measure Direct labor-hours Number of orders. Number of part types Number of boards Machine-hours Requir1 Required 2 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: Complete this question by entering your answers in the tabs below. Expected Overhead Cost $ 270,900 $ 11,745 $78,570 $ 72,400 $ 212,400 Activity Cost Pool Expected Activity Product B Product C Labor-related (DLHS) 13,800 Purchase orders (orders) 37 Parts management (part types) 15 Board etching (boards) 740 General factory (MHS) 6,200 Using the ABC data, determine the total amount of overhead cost assigned to each product. Product A 7,100 78 38 550 2,900 Labor-related Purchase orders Parts management Board etching General factory Compute the activity rate for each of the activity cost pools. Activity Cost Pool Activity Rate per DLH per order per part type per board per MH Expected Activity 30,100 DLHs < Required 1 261 orders 97 part types 1,810 boards 17,700 MHS 4,000 47 30 520 3,900 Required 2 > Product D 5,200 99 14 0 4,700
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 12E: Activity cost pools, activity rates, and product costs using activity-based costing Caldwell Home...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text: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:
17
Activity Cost Pool
Labor-related
Purchase orders
Parts management
Board etching
General factory
Activity Measure
Direct labor-hours
Number of orders
Number of part types
Number of boards
Machine-hours
Activity Cost Pool
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:
Product A
7,100
78
38
550
2,900
Labor-related
Purchase orders
Parts management
Board etching
General factory
Expected
Overhead Cost
$ 270,900
$ 11,745
$78,570
$ 72,400
$ 212,400
Requir1 Required 2
Compute the activity rate for each of the activity cost pools.
Activity Cost Pool
Labor-related (DLHs)
Product C
4,000
47
Purchase orders (orders)
Parts management (part types)
30
Board etching (boards)
520
General factory (MHS)
3,900
Using the ABC data, determine the total amount of overhead cost assigned to each product.
Complete this question by entering your answers in the tabs below.
Activity Rate
per DLH
per order
per part type
per board
per MH
< Required 1
Expected Activity
30,100 DLHs
Expected Activity
Product B
13,800
37
15
740
6,200
1,810 boards
17,700 MHS
261 orders
97 part types
Required 2 >
Product D
5,200
99
14
0
4,700
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Step 1: Introduce to activity rate
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VIEWStep 3: Working for overhead assigned to Product A
VIEWStep 4: Working for overhead assigned to Product B
VIEWStep 5: Working for overhead assigned to Product C
VIEWStep 6: Working for overhead assigned to Product D
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