Goel Company,a Wholesale Distributor,uses Activity-Based Costing for Its Overhead Costs

question 117

Essay

Goel Company,a wholesale distributor,uses activity-based costing for its overhead costs.The company has provided the following data concerning its annual overhead costs and its activity-based costing system:
$$\begin{array} { | l | r | } \hline \text { Overhead Costs: } & \\\hline \text { Wages and salaries } & \$ 460,000 \\\hline \text { Non-wage experises } & \$ 20,000 \\\hline \text { Total } & \$ 580,000 \\\hline\end{array}$$ Distribution of Resource Consumption:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array}{|l|r|r|r|r} \hline & \text { Filling Orders } & \begin{array}{r}\text { Product } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \text { Wages and salaries } & 15 \% & 75 \% & 10 \% & 100 \% \\\hline \text { Non-wage expenses } & 10 \% & 70 \% & 20 \% & 100 \% \\\hline\end{array}$
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.The amount of activity for the year is as follows:
$$\begin{array} { | l | r | } \hline \text { Activity Cost Pool } & \text { Annual Activity } \\\hline \text { Filling orders } & 4,000 \text { orders } \\\hline \text { Product support } & 30 \text { products } \\\hline \text { Other } & \text { Not applicable } \\\hline\end{array}$$
Required:
Compute the activity rates (i.e.,cost per unit of activity)for the Filling Orders and Product Support activity cost pools by filling in the table below:
$$\begin{array} { | l | l | l | } \hline \text { Answer: } & \text { Filling Orders } & \text { Product Support } \\\hline \text { Wages and salaries } & & \\\hline \text { Non-wage experses } & & \\\hline \text { Total } & & \\\hline\end{array}$$

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