Rusties Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the company’s five activity cost pools:
Activity Cost Pool Activity Measure Expected
Overhead
Cost Expected Activity
Labor-related Direct labor-hours $ 19,250 1,375 DLHs
Purchase orders Number of orders $ 1,820 455 orders
Product testing Number of tests $ 6,320 395 tests
Template etching Number of templates $ 960 40 templates
General factory Machine-hours $ 68,600 9,800 MHs
The expected activity for the year was distributed among the company’s four products as follows:
Activity Cost Pool Expected Activity
Product A Product B Product C Product D
Labor-related (DLHs) 650 125 300 300
Purchase orders (orders) 20 65 180 190
Product testing (tests) 250 65 0 80
Template etching (templates) 0 26 10 4
General factory (MHs) 3,800 2,000 1,200 2,800
Using the ABC data, determine the total amount of overhead cost assigned to each product.
Product A
Product B
Product C
Product D
Answers: 3
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Rusties Company recently implemented an activity-based costing system. At the beginning of the year,...
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