a. Computation of activity rates for each activity :- | |||||||
Cost Pool | Budgeted Costs | Product | Activity rate | ||||
Product A | Product B | Total | |||||
a | b | c | d | e=c+d | f =b/e | ||
Cost Pool 1 | $ 108,000 | 82,600 | 75,300 | 157,900 | $0.68 | per cost driver | |
Cost Pool 2 | $ 58,000 | 63,900 | 46,800 | 110,700 | $0.52 | per cost driver | |
Cost Pool 3 | $ 32,000 | 69,700 | 51,400 | 121,100 | $0.26 | per cost driver | |
Total Manufacturing Overhead Cost | $ 198,000 | ||||||
b. Computation of allocated cost to Product A:- | |||||||
Overhead Assigned | Activity Driver | Activity rate | Total Allocated Cost | ||||
a | b | c | d = b×c | ||||
Product A | |||||||
Cost Pool 1 | 82,600 | $0.68 | $ 56,168 | ||||
Cost Pool 2 | 63,900 | $0.52 | $ 33,228 | ||||
Cost Pool 3 | 69,700 | $0.26 | $ 18,122 | ||||
Total | $ 107,518 | ||||||
Allocation to Product A | $ 107,518 |
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