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Assigning Overhead to Products

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See attachment for Prob 3-7.

Required: Compute the amount of overhead applied to each product during the year.

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Solution Summary

The posting has solution to Exercise 3-7 that provides a details explanation on assigning overhead to products using Activity Based Costing. See attachment.

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Please see the attached Excel file.

In order to calculate the amount of overhead applied to each product, we first calculate the activity rate for each activity.

Activity Cost Pool (a) (b) (a) ÷ (b)
Estimated Expected Activity
Overhead Activity Rate
Cost
Labor related $156,000 26,000 DLHs $6 per DLH
Purchase orders $11,000 220 orders $50 per order
Parts management $80,000 100 part types $800 per part type
Board etching $90,000 2,000 boards $45 per board
General factory $180,000 20,000 MHs $9 per MH

In order ...

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