A manufacturer uses activity-based costing to assign overhead costs to products.

Question

A manufacturer uses activity-based costing to assign overhead costs to products. Budgeted cost information for selected activities for next year follows.

Compute activity rates for each of the cost pools. (Round your answers to 2 decimal places.)

Answer is complete but not entirely correct.

Activity Expected Cost Cost Driver Expected Usage of Cost Driver Purchasing $ 70,000 Purchase orders 3,500 purchase orders Cleaning factory 27,000 Square feet 4,000 square feet Providing utilities 46,600 Square feet 4,000 square feet

Explanation / Answer

Activity cost pool Expected Costs Expected Amount of Cost Driver Activity Overhead Rate Purchasing $ 70,000 3,500 purchase orders $ 20.00 per purchase order Cleaning factory $ 27,000 4,000 square feet $ 6.75 per square foot Providing utilities $ 46,600 4,000 square feet $ 11.65 per square foot

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