Question

1. 1000 points value Fellar Corp. has identified the following information Activity cost pools Materials handling Machine maintenance $60,000 51,750 Cost drivers Number of material moves Number of machine hours 960 75,000 1. Calculate the activity rate for each cost pool. (Round your answers to 2 decimal places.) Activity Rate Material Handling per Material Move Machine Maintenance per Machine Hour

Answer 1

Problem 1 – Fellar Corp.

Solution:

Part 1 – Activity rate for each cost pool

Activity Cost Pools	Overhead Costs	Cost Drivers		Activity Rate
Materials handling	$60,000	Number of material moves	960	$62.50 ($60,000 / 960)	per material move
Machine Maintenance	$51,750	Number of machine hours	75,000	$0.69 (51750 / 75000)	per machine hour

Part 2 – Amount of overhead assigned to products

Product A		Activity Rate	Overhead Assigned
Number of material moves	600	$62.50	$37,500
Number of machine hours	42,000	$0.69	$28,980
Total overhead assigned to Product A			$66,480

Product B		Activity Rate	Overhead Assigned
Number of material moves	360	$62.50	$22,500
Number of machine hours	33,000	$0.69	$22,770
Total overhead assigned to Product B			$45,270

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