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    Activity Based Costing - Computer Activity Rates

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    Blank Corporation is a diversified manufacturer of consumer goods. The company's activity based costing system has the following seven activity cost pools:

    Estimated Expected
    Activity Cost Pool Overhead Cost Activity

    Labor related $52,000 8,000 direct labor-hours
    Machine related $15,000 20,000 machine-hours
    Machine setups $42,000 1,000 setups
    Production orders $18,000 500 orders
    Production testing $48,000 2,000 tests
    Packaging $75,000 5,000 packages
    General factory $108,800 8,000 direct labor-hours

    Required:
    1. Compute the activity rate for each activity cost pool.
    2. Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predetermined overhead rate based on direct labor-hours.

    2. Compute ABC Product Costs

    Blank Corporation is a diversified manufacture of industrial goods. The company's activity
    Based costing system has the following six activity cost pools and activity rates:

    Activity Cost Pool Activity Rates
    Labor related $7.00 per direct labor-hour
    Machine related $3.00 per machine-hour
    Machine setups $40.00 per setup
    Production orders $160.00 per order
    Shipments $120.00 per shipment
    General factory $4.00 per direct labor-hour

    Cost and activity data have been supplied for the following products:

    J78 B52
    Direct materials cost per unit $6.50 $31.00
    Direct labor cost per unit $3.75 $ 6.00
    Number of units produced per year 4,000 100

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    https://brainmass.com/business/product-costing/activity-based-costing-computer-activity-rates-101825

    Solution Preview

    1. Compute Activity Rates

    Blank Corporation is a diversified manufacturer of consumer goods. The company's activity based costing system has the following seven activity cost pools:

    Estimated Expected
    Activity Cost Pool Overhead Cost Activity

    Labor related $52,000 8,000 direct labor-hours
    Machine related $15,000 20,000 machine-hours
    Machine setups $42,000 1,000 setups
    Production orders $18,000 500 orders
    Production testing $48,000 2,000 tests
    Packaging $75,000 5,000 packages
    General factory $108,800 8,000 direct ...

    Solution Summary

    The solution explains the calculations under Activity Based Costing

    $2.19

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