Fisher Company uses activity-based costing to determine product costs for extern
ID: 2351499 • Letter: F
Question
Fisher Company uses activity-based costing to determine product costs for external financial reports. At the beginning of the year, management made the following estimates of cost and activity in the companys five activity cost pools:
Activity Cost Pool
Activity
Measure
Expected
Overhead Cost
Expected
Activity
Labor-related
Direct labor-hours
$
200,000
20,000
DLHs
Purchase orders
Number of orders
$
110,000
5,000
orders
Material receipts
Number of receipts
$
108,000
1,800
receipts
Relay assembly
Number of relays
$
960,000
12,000
relays
General factory
Machine-hours
$
1,260,000
70,000
MHs
The expected activity for the year was distributed among the companys four products as follows:
Using the ABC data, determine the total amount of overhead cost assigned to each product.
Activity Cost Pool
Activity
Measure
Expected
Overhead Cost
Expected
Activity
Labor-related
Direct labor-hours
$
200,000
20,000
DLHs
Purchase orders
Number of orders
$
110,000
5,000
orders
Material receipts
Number of receipts
$
108,000
1,800
receipts
Relay assembly
Number of relays
$
960,000
12,000
relays
General factory
Machine-hours
$
1,260,000
70,000
MHs
Explanation / Answer
activity cost pool
activity rate
labor related
$10 per DLH
purchase orders
$22 per order
materials receipts
$60 per receipt
relay assembly
$80 per relay
general factory
$18 per MH
overhead
product A
679600
product B
705800
product c
668200
product d
584400
activity cost pool
activity rate
labor related
$10 per DLH
purchase orders
$22 per order
materials receipts
$60 per receipt
relay assembly
$80 per relay
general factory
$18 per MH
overhead
product A
679600
product B
705800
product c
668200
product d
584400
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.