Transvaal Mining Tools Ltd. of South Africa makes specialty tools used in the mi

Question

Transvaal Mining Tools Ltd. of South Africa makes specialty tools used in the mining industry. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below:

     The managing director of the company would like information concerning the cost of a recently completed order for hard-rock drills. The order required 150 direct labor-hours, 18 hours of product testing, and three sales calls.

a.

Prepare a report summarizing the overhead costs assigned to the order for hard-rock drills. (Omit the "R" sign in your response.)

b.

  What is the total overhead cost assigned to the order? (Omit the "R" sign in your response.)

  Activity Cost Pool          Activity Measure                 Activity Rate   Order size Number of direct labor-hours R 17.60 per direct labor-hour*   Customer orders Number of customer orders R 360 per customer order   Product testing Number of testing hours R 79 per testing hour   Selling Number of sales calls R 1,494 per sales call

Explanation / Answer

order size = 17.60 * 150 = 2640

customer orders = 360 81 = 360

product testing = 79 * 18 = 1422

selling = 1494 * 3 = 4482

total = 8904

b) the total overhead cost assigned to the order is 8904

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