Question

Activity Cost Pool Labor-related Purchase orders Product testing Template etching General factory Activity Measure Direct labor-hours Number of orders Number of tests Number of templates Machine-hours Expected Overhead Cost $19,125 $ 1,660 $ 3,000 $ 1,470 $59,500 Expected Activity 2,125 DLHS 415 orders 300 tests 70 templates 8,500 MHS Exercise 4-11 Part 2 2. The expected activity for the year was distributed among the company's four products as follows: Product A 450 50 Activity Cost Pool Labor-related (DLHS) Purchase orders (orders) Product testing (tests) Template etching (templates) General factory (MHS) Expected Activity Product B Product C 75 800 65 150 Product D 800 150 65 180 55 58 10 2,000 3,500 1,700 1,300 Using the ABC data, determine the total amount of overhead cost assigned to each product. Total Overhead Cost Product A Product B Product C Product D D

Answer 1

Activity Rate (A/B) Determination of Activity Rates :- Expected Expected Activity Cost Pool Overhead Activity (B) Cost (A) Labor - related 19,125 2,125 Purchase orders 1,660 415 Product testing 3,000 300 Template etching 1,470 General factory 59,500 8,500 9.00 Per DLH 4.00 Per Order 10.00 Per Test 21.00 Per Template 7.00 Per MH Determination of Total amount of overhead assigned to each products :- Product A- Overhead Product B - Overhead Product C- Overhead Product D Overhead Activity Activity assigned to Activity assigned to Activity assigned to - Activity assigned to Activity Cost Pool Rate as Consumed Product A Consumed Product B Consumed Product C Consumed Product D above (A) (I) (I*A) (II) (A*II) (III) (A*III) (IV) (A*IV) Labor - related 9.00 450 4,050 75 675 800 7,200 800 7,200 Purchase orders 4.00 200 65 260 150 600 600 Product testing 10.00 180 1,800 55 550 650 Template etching 21.00 1,218 10 210 2 42 General factory 7.00 3,500 24,500 1,700 11,900 2,000 14,000 1,300 9,100 Overhead assigned 30,550 14,603 22,010 17,592 50 150 65 58 Total amount of overhead assigned to each products :- Activity Cost Pool Amounts Product A 30,550 Product B 14,603 Product C 22,010 Product D 17,592 84,755