ACC 560 MART Learn by Doing/acc560mart.com ACC 560 MART Learn by Doing/acc560mart.com | Page 21

Activity Cost Pools
Drivers
Scheduling and travel
Hours of travel

Estimated Overhead

Cost

$85,000

Setup time
setups

90,000

Number of

Supervision
cost

60,000

Direct labor

Expected Use of Cost Drivers per Product
Commercial
Scheduling and travel
500
Setup time

Residential
750

350

250

Instructions
a. Compute the activity-based overhead rates for each of the three cost
pools, and determine the overhead cost assigned to each product line.
b. Compute the operating income for each product line, using the
activity-based overhead rates.
c. What do you believe Peggy Kingman should do?
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ACC 560 Week 4 Homework Chapter 5 and Chapter 6 (E56, E5-9, E5-13, E6-2, E6-7, E6-12)