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

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 Activity Measure Expected Overhead Expected Activity Activity Cost Pool Labor-related Purchase orders Parts management Number of part types 71,280 Cost $ 311,500 $8,840 Direct labor-hours Number of orders 44,500 DLHs 221 orders 99 part types Number of boards Machine-hours 1,820 boards Board etching General factory $ 63,700 $ 148,000 14,800 MHs Required 1. Compute the activity rate for each of the activity cost pools Activity Cost Pool Labor-related Purchase orders Parts management Board etching General factory Activity Rate per DLH per order per part type per board per MH

Explanation / Answer

Activity Rate Labor related(311500/44500) $7 per DLH Purchase orders(8840/221) $40 per order Parts management(71280/99) $720 per part type Board etching(63700/1820) $35 per board General factory(148000/14800) $10 per MH

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