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 Order size Customer orders Product testing Selling Activity Measure Activity Rate Number of direct labor-hours Number of customer orders Number of testing hours $16.80 per direct labor-hour $ 365.00 per customer order $ 75.00 per testing hour Number of sales calls 1,481.00 per sales cal1 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 140 direct labor-hours, 15 hours of product testing, and 2 sales calls Requirec What is the total overhead cost assigned to the order for heavy-duty trailer axles? Activity Cost Pool Order size Customer orders Product testing Selling Total overhead cost ABC Cost

Explanation / Answer

Activity Cost Pool ABC Cost Order size $16.80 x 400 = $6720 Customer orders $365 x 1 = 365 Product testing $75 x 15 = 1125 Selling $1481 x 2 = 2962 Total overhead cost $11172

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