Question

corporate finance

Ace Mining Tools Ltd. of Calgary makes specialty tools used in the mining industry. The company uses an ABC system for internal decision making. The company has four activity cost pools, as listed below:

 

  Activity Cost PoolActivity MeasureActivity Rate
  Order size  Number of direct labour-hours$17.60 per direct labour-hour
  Customer orders  Number of customer orders$360.00 per customer order
  Product testing  Number of testing hours$79.00 per testing hour
  Selling  Number of sales calls$750.00 per sales call

 

The managing director of the company would like information concerning the cost of a recently completed order for hard-rock drills. The order required 100 direct labour-hours, 20 hours of product testing, and five sales calls.

 

Required:

1. Prepare a report showing the overhead cost of the order for hard-rock drills according to the ABC system. What is the total overhead cost assigned to the order?


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