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Activity cost pool Machine setup Materials handling Machinedepreciation Activity cost driver Number of setups...

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Activity cost pool Machine setup Materials handling Machinedepreciation Activity cost driver Number of setups Number of partsMachine hours (mh) Cost assigned to pool 260000 580000 600000Standard product 60 setups 14000 parts 2 mh per product Customproduct 40 setups 12000 parts 4mh per product the company produced14 000 basic products and 10000 custom product. compute theactivity overhead rate for each cost pool using ABC.

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(A) Cost statement: No. of activity cost driver Total no. of activity cost driver
Standard Product Custom Product
Activity cost pool Activity cost driver Cost assigned to pool
Machine setups Number of setups $                  2,60,000             60 Setups           40 Setups           100 Setups
Material handling   Nmber of parts $                  5,80,000       14,000 parts     12,000 parts       26,000 parts
Machine depreciation Machine hours(mh) $                  6,00,000               2 mh             4 mh               6 mh
(B)
Activity overhead rate = Cost assigned to pool/Total no. of actiivty cost driver
Activity cost pool:
Machine setups $              2,60,000 /           100 Setups = $     2,600.00 per Setup
Material handling   $              5,80,000 /       26,000 parts = $         22.31 per part
Machine depreciation $              6,00,000 /               6 mh = $1,00,000.00 per mh
Thus, activity overhead rate for each cost pool using ABC:
Machine setups $              2,600.00 per Setup
Material handling   $                   22.31 per part
Machine depreciation $          1,00,000.00 per mh

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In: AccountingActivity cost pool Machine setup Materials handling Machinedepreciation Activity cost driver Number of setups Number...Activity cost pool Machine setup Materials handling Machinedepreciation Activity cost driver Number of setups Number of partsMachine hours (mh) Cost assigned to pool 260000 580000 600000Standard product 60 setups 14000 parts 2 mh per product Customproduct 40 setups 12000 parts 4mh per product the company produced14 000 basic products and 10000 custom product. compute theactivity overhead rate for each cost pool using ABC.

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