Sultan Company uses an activity-based costing system. At the beginning of the ye

Question

Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Expected âctivity Cost Labor-relsted Purchase orderS Parts managesent Board etching General factory Activity Heasure Expected Activity 0,300 DuHS Direct labor-hours Nunber of oeders Number of part types Number of boards Machine-hours % 270,900 5 12.745 261 orders 97 part types $ 72,400 212,400 1,810 boards 17,700 S Required: . Compute the activity rate for each of the activity cost pools 2. The expected activity for the year was distributed among the company's four products as follows Activity Cost Pool Labor-related (OLHS) Purchase orders (Corders) Parts management (part types) Board etching (boards) General factory (s Product A Product Product C Product D 7.100 78 13,800 37 5,200 9 4,000 520 3,900 2,900 6,200 4,700 Using the ABC data, determine the total amount of overhead cost assigned to each product Required Required 2 Compute the activity rate for each of the activity cost pools per DLH per order per part type per board per MH Putchase orders Board etching General factory Required 1Required 2 Using the ABC data, determine the total amount of overhead cost assigned to each product. Cost Pool Product A Product B Product C Product D Purchase orders (orders) Parts management (part types) Board etching (boards) General factory (MHs) Total

Explanation / Answer

1 Labor related / Direct labor-hours 270900/30100 9 Per DLH Purchase orders /Number of orders 11745/261 45 Per Order Parts management / Number of part types 78570/97 810 Per part type Board etching /Number of boards 72400/1810 40 Per board General factory / Machine-hours 212400/17700 12 Per MH Activity Cost pool Product A Product B Product C Product D Labor related (DLHs) @ 9 per DLH 63900 124200 36000 46800 7100*9 13800*9 4000*9 5200*9 Purchase orders @ 45 perr order 3510 1665 2115 4455 78*45 37*45 47*45 99*45 Part management @ 810 per part type 30780 12150 24300 11340 38*810 15*810 30*810 14*810 Board etching @ 40 per board 22000 29600 20800 0 550*40 740*40 520*40 0 General factory @12 per MH 34800 74400 46800 56400 2900*12 6200*12 3900*12 4700*12 Total 154990 242015 130015 118995

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