Homework SourseDurban Metal Products Ltd of the Republic of South Africa ma
Durban Metal Products, Ltd., of the Republic of South Africa makes specialty metal parts used in applications ranging from the cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below:
The managing director of the company would like information concerning the cost of a recently completed order for heavy-duty trailer axles. The order required 180 direct labor-hours, 19 hours of product testing, and 3 sales calls.
Required:
What is the total overhead cost assigned to the order for heavy-duty trailer axles
| Activity Cost Pool | Activity Measure | Activity Rate | ||
| Order size | Number of direct labor-hours | $ | 16.80 | per direct labor-hour |
| Customer orders | Number of customer orders | $ | 362.00 | per customer order |
| Product testing | Number of testing hours | $ | 70.00 | per testing hour |
| Selling | Number of sales calls | $ | 1,494.00 | per sales call |
Solution
Total overheads assigned to the order are:
180 hours * $16.80 p.h + 19 hours*$70 p.h + 3 sales calls * $1494 per sales call
= $3024 + $1330 + $4482
= $8836
Total overhead cost assigned to the order = $8836
