Question & Answer: Rusties Company recently implemented an activity-based costing system. At the beginning of the year, management ma…..

Rusties Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the companys five activity cost pools Activity Cost Pool Labor-related Purchase orders Product testing Template etching General factory Expected Overhead Cost $ 15,150 $ 2,900 $ 4,070 $ 770 67,600 Activity Measure Expected Activity Direct labor-hours Number of orders Number of tests Number of templates Machine-hours 1,515 DLHs 580 orders 370 tests 35 templates 8,450 MHs value: 3.33 points Required 1. Compute the activity rate for each of the activity cost pools Activity Cost Pool Activity Rate $ 10 per DLH per order Labor-related Purchase orders Product testing Template etching General factory $ 11 per test 22 per template 8 per MH

2. The expected activity for the year was distributed among the companys four products as follows: Expected Activity Activity Cost Pool Labor-related (DLHs) Purchase orders (orders) Product testing (tests) Template etching (templates) General factory (MHs) Product A Product B Product C Product D 400 200 60 7 2,100 625 100 250 90 160 60 400 120 15 1,400 2,700 2,250 Using the ABC data, determine the total amount of overhead cost assigned to each product. Total Overhead Cost Product A Product B Product C Product D

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Rusties Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the company’s five activity cost pools: Compute the activity rate for each of the activity cost pools The expected activity for the year was distribution among the company’s four products as follows: Using the ABC data, determine the total amount of overhead cost assigned to each product.

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