Question

4. Data concerning three of the activity cost pools of Brook LLC, a legal firm, have been provided below: Activity Cost Pools Researching legal issues. Meeting with clients ....... Preparing documents ...... Total Cost $29,920 $665,500 $116,820 Total Activity 680 research hours 5,324 meeting hours 6,490 documents The activity rate for the "meeting with clients" activity cost pool is closest to: 5. Matt Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 8.000 units and of Product B is 6.000 units. There are three activity overhead cost pools, with estimated total overhead cost and expected activity as follows: Activity Cost Pool Expected Activity Product A Product B Total . .. Activity 1.. Activity 2... Activity 3. Estimated Cost $20,000 $37,000 $91,200 100 800 400 200 3,000 500 1,000 3,800 800 The applied overhead cost per unit of Product A under activity-based costing is closest to: 6. Sarah Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Assembly.... Processing orders...... Inspection .............. $387,000 $68,510 $129,117 Total Activity 25,000 machine-hours 1,700 orders 1,930 inspection-hours The company makes 240 units of product T91H a year, requiring a total of 550 machine-hours, 90 orders, and 40 inspection-hours per year. The product's direct materials cost is $16.98 per unit and its direct labor cost is $12.09 per unit. According to the activity-based costing system, the unit product cost of product T91H is closest to:

Answer 1

4)	Activity rate for meeting with client
	=total cost / total activity
	=$665500/5324
	=$125 per meeting hour
5)
	Activity	Total Overheads	Expected Activity Level	Rate Per Activity
	Activity 1	$                 20,000	500	$                    40.00
	Activity 2	$                 37,000	1000	$                    37.00
	Activity 3	$                 91,200	3800	$                    24.00
	Overhead Assigned To The Product Product A
	Activity	Rate Per Activity	Activity Level	Overhead Cost
	a	b	c	d=b*c
	Activity 1	$                         40	100	$                    4,000
	Activity 2	$                         37	800	$                 29,600
	Activity 3	$                         24	800	$                 19,200
	Total			$                 52,800
	Overhead cost per unit = $52800/8000 units
	=$6.60 per unit
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