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Home / Questions / EXERCISE 7 6 Second-Stage Allocation to an Order LO4 Transvaal Mining Tools Ltd. of South ...

EXERCISE 7 6 Second-Stage Allocation to an Order LO4 Transvaal Mining Tools Ltd. of South Africa makes specialty tools used in the mining industry The company uses an activity-based costing system

EXERCISE 7–6 Second-Stage Allocation to an Order [LO4]

Transvaal Mining Tools Ltd. of South Africa makes specialty tools used in the mining industry. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below:

 

 

Activity Cost Pool

Activity Measure

Activity Rate

Order size . . . . . . . . . . . . . . . . .

Customer orders . . . . . . . . . . . .

Product testing . . . . . . . . . . . . . Selling . . . . . . . . . . . . . . . . . . . .

Number of direct labor-hours Number of customer orders Number of testing hours Number of sales calls

R17.60 per direct labor-hour* R360 per customer order R79 per testing hour

R1,494 per sales call

 

 

 

The managing director of the company would like information concerning the cost of a recently completed order for hard-rock drills. The order required 150 direct labor-hours, 18 hours of product testing, and three sales calls.

Required:

Prepare a report summarizing the overhead costs assigned to the order for hard-rock drills. What is the total overhead cost assigned to the order?

Jun 29 2020 View more View Less

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