Chapter 7 G Saved Help Save & Exit Submit Check my work 2 Durban Metal Products,

ID: 2529985 • Letter: C

Question

Chapter 7 G Saved Help Save & Exit Submit Check my work 2 Durban Metal Products, Ltd., of the Republic of South Africa makes specialty metal parts used in applications ranging from the cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below: 2.5 points Activity Cost Poo Order size Customer orders Product testing Selling Activity Measure Activity Rate Number of direct labor-hours Number of customer orders Number of testing hours Number of sales calls 16.10 per direct labor-hour $ 359.00 per customer order $ 70.00 per testing hour 1,480.00 per sales call eBook Hint Print References The managing director of the company would like information concerning the cost of a recently completed order for heavy-duty trailer axles. The order required 180 direct labor-hours, 18 hours of product testing, and 3 sales calls. Required What is the total overhead cost assigned to the order for heavy-duty trailer axles? ABC Cost Activity Cost Pool Order size Customer orders Product testing Selling Total overhead cost

Explanation / Answer

Answers

Activity Cost Pool

Activity rate (A)

No. of activities (B)

ABC Cost (A x C)

Order Size

$ 16.10 per DLH

180 DLHs

$ 2,898.00

Customer Orders

$ 359.00 per Customer order

1 order

$ 359.00

Product Testing

$ 70.00 per testing hours

18 testing hours

$ 1,260.00

Selling

$ 1,480.00 per sales call

3 sales call

$ 4,440.00

Total Overhead cost

$ 8,957.00