A manufacturer uses activity-based costing to assign overhead costs to products.

Question

A manufacturer uses activity-based costing to assign overhead costs to products. Budgeted information for selected activities for next year follows.

4 A manufacturer uses activity-based costing to assign overhead costs to products. Budgeted information for selected activities for next year follows Activity Cost Driver Purchase orders Square feet Square feet Expected Cost Expected Usage of Cost Driver Purchasing Cleaning factory Providing utilities S201,400 36,000 81,160 5,300 purchase orders 5,800 square feet 5,800 square feet Compute activity rates for each of the cost pools. (Round your answers to 2 decimal places.) Expec Amount of Cost Driver Activity cost poolCosts Expected Activity Overhead Rate Purchasing 210,400 5,300 per purchase order Factory 5,800 per square foot

Explanation / Answer

Schedule of activity rates for each of the cost pools: Activity cost pool Expected costs (A) Expected amount of cost driver (B) Activity Overhead Rate (A)/(B) Purchasing 201,400 5,300 38.00 per purchase order Cleaning Factory 36,000 5,800 6.21 per square foot Providing facilities 81,160 5,800 13.99 per square foot

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