Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below: Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
The activity rate for the Supervising activity cost pool under activity-based costing is closest to:
A) $38.00 per batch
B) $7.00 per batch
C) $23.80 per batch
D) $14.00 per batch

Question

Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:  Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:
 Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
 The activity rate for the Supervising activity cost pool under activity-based costing is closest to:
A) $38.00 per batch 
B) $7.00 per batch 
C) $23.80 per batch 
D) $14.00 per batch

Quizplus · Accepted Answer

Supervising: $23,800 ÷ 1,000 batches = $23.80 per batch

Mirabile Corporation Uses Activity-Based Costing to Compute Product Margins