Question

Ready Ride is a trucking company. It provides local, short-haul, and long-haul services. It has developed the following three cost pools.
Activity Cost Pool Cost Drivers Estimated Overhead Estimated Use of Cost Driver per Activity
Loading and unloading Number of pieces $79,290 88,100
Travel Miles driven 441,750 589,000
Logistics Hours 62,040 2,820
Required:
1. Compute the activity-based overhead rates for each pool. (Round answers to 2 decimal places, e.g. 12.75.)

Answer 1

Answer:

$0.89 per piece

$0.75 per miles

$22 per hour

Explanation:

The computation of the activity-based overhead rates for each pool is shown below:

Activity-based overhead rate = Estimated Overhead ÷  Estimated Use of Cost Driver per Activity

For Loading and unloading, it would be

= $79,200 ÷ 88,100 = $0.89 per piece

For Travel miles driven, it would be

= $441,750 ÷ 589,000 = $0.75 per miles

For logistic hours, it would be

= $62,040 ÷ 2,820 = $22 per hour