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    Activity-based overhead rates

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    I have a problem that I need help with. I need to compute the activity-based overhead rates for 4 cost pools.

    Stereo City Co. manufactures speakers and receivers and uses activity-based costing. The following information is available:
    Instructions: Compute the activity-based overhead rates.
    Expected Use of Cost Driver
    Per Activity
    Activity Cost Pool Estimated Overhead
    Ordering $180,000 24,000 orders
    Soldering 192,000 64,000 machine hours
    Inspecting 894,000 120,000 labor hours
    Packing 873,600 56,000 boxes

    © BrainMass Inc. brainmass.com December 24, 2021, 8:40 pm ad1c9bdddf
    https://brainmass.com/business/accounting/activity-based-overhead-rates-299014

    SOLUTION This solution is FREE courtesy of BrainMass!

    Stereo City Co. manufactures speakers and receivers and uses activity-based costing. The following information is available:
    Instructions: Compute the activity-based overhead rates.
    Expected Use of Cost Driver
    Per Activity
    Activity Cost Pool Estimated Overhead
    Ordering $180,000 24,000 orders
    Soldering 192,000 64,000 machine hours
    Inspecting 894,000 120,000 labor hours
    Packing 873,600 56,000 boxes

    The activity rate for a cost pool is calculated as Estimated Cost of Activity/Expected use of cost driver
    The activity based overhead rates are
    Ordering = 180,000/24,000 = $7.50 per order
    Soldering = 192,000/64,000 = $3 per machine hour
    Inspection = 894,000/120,000 = $7.45 per labor hour
    Packing = 873,600/56,000 = $15.6 per box

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com December 24, 2021, 8:40 pm ad1c9bdddf>
    https://brainmass.com/business/accounting/activity-based-overhead-rates-299014

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