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Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the activity rate for each o
Required 1 Required Using the ABC data, determine the total amount of overhead cost assigned to each product. Overhead Cost A
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Answer #1
Ans. 1 Activity cost pool Activity rate (a/b)
Labor related $6.00 Per DLH
Purchase orders $50.00 per order
Parts management $800.00 per part type
Board etching $45.00 per board
General factory $9.00 per MH
*Calculations :
Activity rate =   Estimated overhead cost / Expected activity
Activity cost pool Estimated overhead (a) Total activity (b) Activity rate (a/b)
Labor related $156,000 26000 $6.00 Per DLH
Purchase orders $11,000 220 $50.00 per order
Parts management $80,000 100 $800.00 per part type
Board etching $90,000 2000 $45.00 per board
General factory $180,000 20000 $9.00 per MH
Ans. 2 Overhead Cost Assigned
Activity cost pool Product A Product B Product C Product D
Labor related   (DLHs) $36,000 $66,000 $24,000 $30,000
Purchase orders (orders) $3,000 $1,500 $2,000 $4,500
Parts management (part types) $24,000 $12,000 $32,000 $12,000
Board etching (boards) $22,500 $40,500 $27,000 $0
General factory (MHs) $27,000 $72,000 $27,000 $54,000
Total $112,500 $192,000 $112,000 $100,500
*Calculations :
Overhead cost assigned = Activity rate * Expected activity of particular product
Activity cost pool Product A Product B Product C Product D
Labor related   (DLHs) $6 * 6,000 $6 * 11,000 $6 * 4,000 $6 * 5,000
Purchase orders (orders) $50 * 60 $50 * 30 $50 * 40 $50 * 90
Parts management (part types) $800 * 30 $800 * 15 $800 * 40 $800 * 15
Board etching (boards) $45 * 500 $45 * 900 $45 * 600 $45 * 0
General factory (MHs) $9 * 3,000 $9 * 8,000 $9 * 3,000 $9 * 6,000
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