4. Goel Company, a wholesale distributor, uses activity-based costing for its ov

Question

4. Goel Company, a wholesale distributor, uses activity-based costing for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity based costing system: Shouo oork! Overhead costs: Non-wage expenses Total. $460,000 $120.000 $580,000 Distribution of resource consumption Activity Cost Pools Filling Product Orders Support Other Total 100% 75% 70% 10% 20% wages and salaries 15% 10% Non-wage expenses 100% The "Other" activity cost pool consists of the costs of idle capacity and organization - sustaining costs. The amount of activity for the year is as follows Activity Cost Pool Filling orders4,000 orders Product support Other.... Not applicable 30 products Required: Compute the activity rates (i.c., cost per unit of activity) for the Filling Orders and Product Support activity cost pools by filling in the table below: Filling Product Orders Support Wages and salaries... Non-wage expenses Total

Explanation / Answer

Solution:

Filing orders Product support Others Total Wage and salaries 69,000 345,000 46,000 460,000 Non-wage expenses 12,000 84,000 24,000 120,000 Total 81,000 429,000 70,000 580,000 Activity 4000 orders 30 products Activity rate (=costs/activity) 17.25 11,500 Non-wage expenses 3 2,800 Total 20.25 14,300

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