Rusties Company recently implemented an activity-based costing system. At the ma
ID: 2558904 • Letter: R
Question
Rusties Company recently implemented an activity-based costing system. At the manegement made the following estimates of cost and activity in the company's five activity cost pools Activity Me Direct labor-hours Number of orders Number of tests Number of templetes Machine-hours Cost $ 30,115 $ 2,320 $ 6,930 $ 870 65,100 Labor-related Purchase orders Product testing Template etching General foctory 1,585 DLHs 580 orders 330 tests 30 templates 9,300 MHs 4 Value 2.08 points Required . Compute the activity rate for each of the activity cost pools Activity Rate Labor-related Purchase orders Product testing Template etching General factory per DLH per order per test per template per MHExplanation / Answer
Answer = 1 Step 1: Calculation of the Activity Cost Driver Rate Activity Cost Driver Rate = Activity Cost / Cost Driver Activity Cost / Cost Driver = Activity Cost Driver Activity Cost "/" Cost Driver " = " To Cost Driver Rate Labour Related Direct Labour Hours 30,115 "/" 1,585 " = " To 19.00 Purchasing Orders Number of Orders 2,320 "/" 580 " = " To 4.00 Product Testing Number of Tests 6,930 "/" 330 " = " To 21.00 Template Testing Number of tempates 870 "/" 30 " = " To 29.00 General Factory Machiene Hours 65,100 "/" 9,300 " = " To 7.00 Total $ 1,05,335.00 Answer = 2 DISTRIBUTION OF OVERHEAD COST AS PER ABC COST DRIVER RATE Activity Product Cost Driver Used "X " By Cost Driver Rate " = " To Activity Cost Labour Related Direct Labour Hours Product A 625 "X " By $ 19.00 " = " To $ 11,875 Product B 160 "X " By $ 19.00 " = " To $ 3,040 Product C 400 "X " By $ 19.00 " = " To $ 7,600 Product D 400 "X " By $ 19.00 " = " To $ 7,600 Purchasing Orders Number of Orders Product A 30 "X " By $ 4.00 " = " To $ 120 Product B 190 "X " By $ 4.00 " = " To $ 760 Product C 170 "X " By $ 4.00 " = " To $ 680 Product D 190 "X " By $ 4.00 " = " To $ 760 Product Testing Number of Tests Product A 190 "X " By $ 21.00 " = " To $ 3,990 Product B 55 "X " By $ 21.00 " = " To $ 1,155 Product C - "X " By $ 21.00 " = " To $ - Product D 85 "X " By $ 21.00 " = " To $ 1,785 Template Testing Number of tempates Product A - "X " By $ 29.00 " = " To $ - Product B 17 "X " By $ 29.00 " = " To $ 493 Product C 10 "X " By $ 29.00 " = " To $ 290 Product D 3 "X " By $ 29.00 " = " To $ 87 General Factory Machiene Hours Product A 3,600 "X " By $ 7.00 " = " To $ 25,200 Product B 1,700 "X " By $ 7.00 " = " To $ 11,900 Product C 1,700 "X " By $ 7.00 " = " To $ 11,900 Product D 2,300 "X " By $ 7.00 " = " To $ 16,100 Total $ 1,05,335
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