Question

Durban Metal Products, Ltd., of the Republic of South Africa makes specialty metal parts used in applications ranging from the cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below: Activity Cost Pool Order size Customer orders Product testing Selling Activity Measure Number of direct labor-hours Number of customer orders Number of testing hours Number of sales calls Activity Rate $ 17.10 per direct labor-hour $ 370.00 per customer order $ 74.00 per testing hour $1,494.00 per sales call The managing director of the company would like information concerning the cost of a recently completed order for heavy-duty trailer axles. The order required 160 direct labor-hours, 19 hours of product testing, and 4 sales calls. Required: What is the total overhead cost assigned to the order for heavy-duty trailer axles? ABC Cost Activity Cost Pool Order size Customer orders Product testing Selling Total overhead cost

Answer 1

Order size (17.10*160)	2736
Customer orders (1*370)	370
Product testing (74*19)	1406
Selling (1494*4)	5976
Total	10488

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