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Texas A&M University-Commerce Operations And Supply Chain Management Assignment Help - Sanborn Industries

Question - Sanborn Industries has the following overhead costs and cost drivers. Direct labor hours are
estimated at 100,000 for the year.

Activity Cost Pool Cost Driver Est. Overhead Cost Driver Activity
Ordering and Receiving Orders $120,000 500 orders
Machine Setup Setups 297,000 450 setups
Machining Machine hours 1,500,000 125,000 MH
Assembly Parts 1,200,000 1,000,000 parts
Inspection Inspections 300,000 500 inspections
If overhead is applied using activity-based costing, the overhead application rate for ordering and
receiving is

(a) $1.20 per direct labor hour.

(b) $6,834 per order.

(c) $240 per order.

(d) $0.12 per part.

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