A manufacturing company uses an activity-based costing system. The company hasthree products: A, B and C. At the beginning of the year, the company made thefollowing estimates of cost and activity for its five activity cost pools:ActivityActivity cost poolLabor-relatedExpectedOverhead cost€280,000Expectedactivity35,000 DLHSmeasureDirect laborhoursPurchase ordersNumber of€12,000158 OrdersordersParts ManagementNumber of€90,00065 Part TypesBoard etchingpart typesNumber of€110,0004,000 ВoardsboardsGeneral factoryМachine€190,00017,000 MHshoursThe expected activity rate for theproducts as follows:year was distributedamongthecompany'sthreeExpected ActivityProduct BActivity Cost PoolProduct AProduct CLabor-related (DLHS)6,0006011,000304,00040Purchase ordersParts managementBoard etchingGeneral factory3015405009006003,0008,0003,000a) Compute the activity rate for each activity cost poolb) Using the above data, determine the total amount of overhead cost assigned toproducts B.

Overhead is the cost incurred by an entity on the production or selling of the goods.

A manufacturing company uses an activity-based costing system. The company has three products: A, B and C. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Activity Activity cost pool Labor-related Expected Overhead cost €280,000 Expected activity 35,000 DLHS measure Direct labor hours Purchase orders Number of orders €12,000 158 Orders Parts Management Number of €90,000 65 Part Types part types Number of Board etching €110,000 4,000 Boards boards Machine General factory €190,000 17,000 MHs hours The expected activity rate for the year was distributed among the company's three products as follows: Expected Activity Product B Activity Cost Pool Product A Product C Labor-related (DLHS) Purchase orders 6,000 4,000 11,000 30 60 40 Parts management Board etching General factory 30 15 40 500 900 600 3,000 8,000 3,000 a) Compute the activity rate for each activity cost pool b) Using the above data, determine the total amount of overhead cost assigned to products B.

A manufacturing company uses an activity-based costing system. The company has three products: A, B and C. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Activity Activity cost pool Labor-related Expected Overhead cost €280,000 Expected activity 35,000 DLHS measure Direct labor hours Purchase orders Number of orders €12,000 158 Orders Parts Management Number of €90,000 65 Part Types part types Number of Board etching €110,000 4,000 Boards boards Machine General factory €190,000 17,000 MHs hours The expected activity rate for the year was distributed among the company's three products as follows: Expected Activity Product B Activity Cost Pool Product A Product C Labor-related (DLHS) Purchase orders 6,000 4,000 11,000 30 60 40 Parts management Board etching General factory 30 15 40 500 900 600 3,000 8,000 3,000 a) Compute the activity rate for each activity cost pool b) Using the above data, determine the total amount of overhead cost assigned to products B.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter12: Activity-based Management

Section: Chapter Questions

Problem 1CE: Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and...

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