Hettich Corporation uses an activity-based costing system with the following three activity cost pools: The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs. The company has provided the following data concerning its costs: The distribution of resource consumption across activity cost pools is given below: The activity rate for the Order Processing activity cost pool is closest to:
A)$1, 400 per order
B)$1, 600 per order
C)$1, 150 per order
D)$800 per order

Question

Hettich Corporation uses an activity-based costing system with the following three activity cost pools:  The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs. The company has provided the following data concerning its costs:  The distribution of resource consumption across activity cost pools is given below:  The activity rate for the Order Processing activity cost pool is closest to:
A)$1, 400 per order 
B)$1, 600 per order 
C)$1, 150 per order 
D)$800 per order

Quizplus · Accepted Answer

Allocations to the Order Processing activity cost pool:
 11eaa0c8_9565_c6c6_9cb2_8d5c62791d20_TB2487_00 Order Processing: $230, 000 ÷ 200 orders = $1, 150 per order

Hettich Corporation Uses an Activity-Based Costing System with the Following