Sultan Company uses an activity-based costing system At the beginning of the yea

Question

Sultan Company uses an activity-based costing system At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools Activity Measure Expected Overhead Expected Activity Activity Cost Pool Labor-related Purchase orders Parts management Direct labor-hours Number of orders Number of part types Cost $311,500 44,500 DLHs $8,840 $ 221 orders 71,280 99 part types Board etching General factory Number of boards Machine-hours $ 63,700 $ 148,000 1,820 boards 14,800 MHs Required: 1. Compute the activity rate for each of the activity cost pools Activity Cost Pool Labor-related Purchase orders Parts management Board etching General factory Activity Rate per DLH per order per part type per board per MH

Explanation / Answer

Activity cost pool Activity rate Labor-related 7 =311500/44500 Purchase orders 40 =8840/221 Parts management 720 =71280/99 Board etching 35 =63700/1820 General factory 10 =148000/14800 Product A Product B Product C Product D Labor-related 47600 191100 32200 40600 Purchase orders 2040 1160 1960 3680 Parts management 24480 12240 23760 10800 Board etching 17500 26950 19250 0 General factory 21000 63000 24000 40000 Total 112620 294450 101170 95080

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