Question

Required information [The following information applies to the questions displayed below.) Rusties Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the company's five activity cost pools: 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 $ 28,050 $ 2,100 $ 4,420 $ 1,250 $81,600 Expected Activity 1,870 DLHS 420 orders 260 tests 50 templates 10, 200 MHs 2. The expected activity for the year was distributed among the company's four products as follows: Activity Cost Pool Labor-related (DLHS) Purchase orders (orders) Product testing (tests) Template etching (templates) General factory (MHs) Product A 700 80 130 Expected Activity Product B Product C 170 500 130 55 36 2,100 1,500 60 Product D 500 150 75 4 10 3,800 2,800 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

Answer 1

Expected Overhead Cost Expected Activity Activity rate Activity Cost Pool Activity Measure Labor-related Direct labor-hours Purchase orders Number of orders $ Product testing Number of tests $ Template etching Number of templates | $ General factory Machine-hours $ 28,050 2,100 4,420 1,250 81,600 1,870 DLHs 420 orders 260 tests 50 templates 10,200 MHs $ $ $ $ $ a + b 15.00 per DLH 5.00 per order 17.00 per test 25.00 per template 8.00 per MH

Activity Cost Pool Activity Rate Labor-related $ 15.00 per DLH Purchase orders $ 5.00 per order Product testing $ 17.00 per test Overhead Assigned TOTAL OVERHEADS Product A Product B Product Product D 10,500 $ 2,550 $ 7,500 $ 7,500 $ 28,050 (700 DLHS $15) (170 DLHs $15) (500 DLHS $15) (500 DLHs $15) 400 $ 300 $ 650$ 750 $ 2,100 (80 orders * $5) (60 orders * $5) (130 orders * $5) (150 orders * $5) 2,210 $ 935 $ - $ 1,275 $ 4,420 (130 tests $17) (55 tests x $17) (O tests x $17) (75 tests x $17) - $ 900 $ 250 $ 100 1,250 (O templates * $25) (36 templates * $25) (10 templates * $25) (4 templates * $25) 30,400 $ 16,800 $ 12,000 $ 22,400 $ 81,600 (3800 MHS $8) | (2100 MHs $8) (1500 MHs * $8) | (2800 MHS * $8) $ 43,510 $ 21,485 $ 20,400 $ 32,025 $ 117,420 Template etching $ 25.00 per template General factory $ 8.00 per MH TOTAL OVERHEAD COST ASSIGNED

	TOTAL OVERHEAD COST
Product A	$                 43,510
Product B	$                 21,485
Product C	$                 20,400
Product D	$                 32,025