Question

Required information [The following information applies to the questions displayed below.] Adria 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 Material receipts Relay assembly General factory Activity Measure Direct labor-hours Number of orders Number of receipts Number of relays Machine-hours Expected Overhead Cost $ 32,000 $ 3,000 $ 9,000 $ 12,000 $ 200,000 Expected Activity 8,000 DLHS 3,000 orders 900 receipts 2,000 relays 40,000 MHS 2. The expected activity for the year was distributed among the company's four products as follows: Expected Activity Product A Product B Product C Product D 2,500 600 3,200 1,700 200 450 1,450 300 285 315 190 190 560 1,060 12,500 8,000 8,000 11,500 Activity Cost Pool Labor-related (DLHS) Purchase orders (orders) Materials receipts (receipts) Relay assembly (relays) General factory (MHS) 900 Using the ABC data, determine the total amount of overhead cost assigned to each product. Product A Product B Product C Product D

Answer 1

• Requirement 2

	Total
Product A	$    76,840.00
Product B	$    46,840.00
Product C	$    60,210.00
Product D	$    72,110.00

--Details

	Labor-related	Purchase orders	Material receipts	Relay assembly	General factory	Total
Product A	$        10,000.00	$                    200.00	$      3,000.00	$                1,140.00	$     62,500.00	$    76,840.00
Product B	$          2,400.00	$                    450.00	$      2,850.00	$                1,140.00	$     40,000.00	$    46,840.00
Product C	$        12,800.00	$                    900.00	$      3,150.00	$                3,360.00	$     40,000.00	$    60,210.00
Product D	$          6,800.00	$                 1,450.00	$                   -	$                6,360.00	$     57,500.00	$    72,110.00

• Workings

	Activity Cost Pool	Activity Measure	Expected Overhead cost	Expected Activity		Activity Rates
			[A]	[B]		[A/B]
	Labor-related	Direct labor-hours	$                  32,000.00	8,000	DLHs	$                                                         4.00	per DLHs
	Purchase orders	Number of orders	$                     3,000.00	3,000	orders	$                                                         1.00	per orders
	Material receipts	Number of receipts	$                     9,000.00	900	receipts	$                                                       10.00	per receipts
	Relay assembly	No of relays	$                  12,000.00	2,000	relays	$                                                         6.00	per relays
	General factory	Machine-hours	$                200,000.00	40,000	MHs	$                                                         5.00	per MHs

Product Wise allocation

	Expected Activity	Activity Rates		Overhead Allocated
Activity Cost Pool	Product A
Labor-related	2,500	$                             4.00	per DLHs	$         10,000.00
Purchase orders	200	$                             1.00	per orders	$               200.00
Material receipts	300	$                           10.00	per receipts	$           3,000.00
Relay assembly	190	$                             6.00	per relays	$           1,140.00
General factory	12,500	$                             5.00	per MHs	$         62,500.00
Amount of Overhead Cost assigned				$         76,840.00
	Expected Activity	Activity Rates		Overhead Allocated
Activity Cost Pool	Product B	[A/B]
Labor-related	600	$                             4.00	per DLHs	$           2,400.00
Purchase orders	450	$                             1.00	per orders	$               450.00
Material receipts	285	$                           10.00	per part types	$           2,850.00
Relay assembly	190	$                             6.00	per boards	$           1,140.00
General factory	8,000	$                             5.00	per MHs	$         40,000.00
Amount of Overhead Cost assigned				$         46,840.00
	Expected Activity	Activity Rates		Overhead Allocated
Activity Cost Pool	Product C	[A/B]
Labor-related	3,200	$                             4.00	per DLHs	$         12,800.00
Purchase orders	900	$                             1.00	per orders	$               900.00
Material receipts	315	$                           10.00	per part types	$           3,150.00
Relay assembly	560	$                             6.00	per boards	$           3,360.00
General factory	8,000	$                             5.00	per MHs	$         40,000.00
Amount of Overhead Cost assigned				$         60,210.00
	Expected Activity	Activity Rates		Overhead Allocated
Activity Cost Pool	Product D	[A/B]
Labor-related	1,700	$                             4.00	per DLHs	$           6,800.00
Purchase orders	1,450	$                             1.00	per orders	$           1,450.00
Material receipts	-	$                           10.00	per part types	$                        -
Relay assembly	1,060	$                             6.00	per boards	$           6,360.00
General factory	11,500	$                             5.00	per MHs	$         57,500.00
Amount of Overhead Cost assigned				$         72,110.00