Orzel Corporation has provided the following data concerning its overhead costs for the coming year: The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year: The Other activity cost pool does not have a measure of activity;it is used to accumulate costs of idle capacity and organization-sustaining costs. The distribution of resource consumption across activity cost pools is given below: The activity rate for the Assembly activity cost pool is closest to:
A)$2.70 per labor-hour
B)$9.00 per labor-hour
C)$9.90 per labor-hour
D)$16.20 per labor-hour

Question

Orzel Corporation has provided the following data concerning its overhead costs for the coming year:  The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year:  The Other activity cost pool does not have a measure of activity;it is used to accumulate costs of idle capacity and organization-sustaining costs. The distribution of resource consumption across activity cost pools is given below:  The activity rate for the Assembly activity cost pool is closest to:
A)$2.70 per labor-hour 
B)$9.00 per labor-hour 
C)$9.90 per labor-hour 
D)$16.20 per labor-hour

Quizplus · Accepted Answer

Allocations to the Assembly activity cost pool:
 11eaa0c8_9564_682e_9cb2_dfd7a758abc1_TB2487_00 Assembly: $99, 000 ÷ 10, 000 labor-hours = $9.90 per labor-hour

Orzel Corporation Has Provided the Following Data Concerning Its Overhead