Durban Metal Products, Ltd., of the Republic of South Africa makes specialty met

Question

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: Activity Cost Pool Activity Measure Activity Rate s 17.20 per direct labor Order size customer orders Product testing Number of testing hours 76.00 per testing hour Number of direct labor hours Number of customer orders Number of sales calls hour 352.00 per customer order s1,491.00 per sales call Selling managing director of the company would like information concerning the cost of a recently completed order for heavy duty trailer axles. The order required 140 direct labor-hours, 11 hours of product testing, and 5 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

ABC cost Order size(17.2*140) $2408 Customer orders $352 Product testing(76*11) 836 Selling(1491*5) $7455 Total overhead cost $11051.

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