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Cost Accounting: Sultan Company uses an activity-based costing system. At the beginning of the year
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 Cost Pool Activity Measure Expected Overhead Cost Expected Activity
Labor-related Direct labor-hours $ 165,200 41,300 DLHs
Purchase orders Number of orders $ 13,020 217 orders
Parts management Number of part types $ 82,840 109 part types
Board etching Number of boards $ 92,400 1,680 boards
General factory Machine-hours $ 128,100 18,300 MHs
Required:
Compute the activity rate for each of the activity cost pools.
The expected activity for the year was distributed among the company’s four products as follows:
Activity Cost Pool Expected Activity
Product A Product B Product C Product D
Labor-related (DLHs) 7,400 24,400 3,500 6,000
Purchase orders (orders) 60 29 45 83
Parts management (part types) 38 18 38 15
Board etching (boards) 340 700 640 0
General factory (MHs) 2,600 6,200 4,000 5,500
Using the ABC data, determine the total amount of overhead cost assigned to each product.
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