Question

A manufacturer uses activity-based costing to assign overhead costs to products. Budgeted cost information for selected activities for next year follows. Activity Expected Cost Cost Driver Expected Usage of Cost Driver Purchasing $ 183,600 Purchase orders 5,100 purchase orders Cleaning factory 35,000 Square feet 5,600 square feet Providing utilities 77,000 Square feet 5,600 square feet Compute activity rates for each of the cost pools. (Round your answers to 2 decim

Answer 1

Answer:

$36 per purchase order; $20 per square foot

Explanation:

Factory expected cost:

= Cleaning factory + Providing utilities

= $35,000  + $77,000

= $112,000

Purchasing:

Activity overhead rate:

= Expected costs ÷ Expected amount of cost driver

= $ 183,600 ÷ 5,100

= $36 per purchase order

Factory:

Activity overhead rate:

= Expected costs ÷ Expected amount of cost driver

= $112,000 ÷ 5,600

= $20 per square foot