Requirement 1:
Activity Rate
Activity Cost pool | Activity Rate |
Labor-related | $48,000 / 8,000 DLHs = $6 per DLH |
Purchase orders | $6,900 / 2,300 orders = $3 per order |
Material receipts | $11,400 / 950 receipts = $12 per receipt |
Relay assembly | $11,700 / 1,300 relays = $9 per relay |
General factory | $328,000 / 41,000 MHS = $8 per MHS |
Requirement 2:
Amount of overhead cost assigned to each product
Product A | $142,880 |
Product B | $69,390 |
Product C | $73,763 |
Product D | $119,967 |
Working Notes:
Product A
Activity Cost Pool | Overhead cost $ |
Labor-related (2,900 DLHs * $6) | 17,400 |
Purchase orders (150 orders * $3) | 450 |
Material receipts (550 receipts * $12) | 6,600 |
Relay assembly (270 relays * $9) | 2,430 |
General factory (14,500 MHs * $8) | 116,000 |
Total Overhead Cost | 142,880 |
Product B
Activity Cost Pool | Overhead cost $ |
Labor-related (1,000 DLHs * $6) | 6,000 |
Purchase orders (500 orders * $3) | 1,500 |
Material receipts (115 receipts * $12) | 1,380 |
Relay assembly (270 relays * $9) | 2,430 |
General factory (7,260 MHs * $8) | 58,080 |
Total Overhead Cost | 69,390 |
Product C
Activity Cost Pool | Overhead cost $ |
Labor-related (3,200 DLHs * $6) | 19,200 |
Purchase orders (805 orders * $3) | 2,415 |
Material receipts (285 receipts * $12) | 3,420 |
Relay assembly (312 relays * $9) | 2,808 |
General factory (5,740 MHs * $8) | 45,920 |
Total Overhead Cost | 73,763 |
Product D
Activity Cost Pool | Overhead cost $ |
Labor-related (900 DLHs * $6) | 5,400 |
Purchase orders (845 orders * $3) | 2,535 |
Material receipts (0 receipts * $12) | 0 |
Relay assembly (448 relays * $9) | 4,032 |
General factory (13,500 MHs * $8) | 108,000 |
Total Overhead Cost | 119,967 |
All the best...
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