Reck Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Machining, $11,700; Order Filling, $17,800; and Other, $13,500. Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:
A) $43.00 per order
B) $7.50 per order
C) $6.00 per order
D) $17.80 per order

Question

Reck Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Machining, $11,700; Order Filling, $17,800; and Other, $13,500. Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:  The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:
A) $43.00 per order 
B) $7.50 per order 
C) $6.00 per order 
D) $17.80 per order

Quizplus · Accepted Answer

Total orders = 200 orders + 800 orders = 1,000 orders
Order Filling: $17,800 ÷ 1,000 orders = $17.80 per order

Reck Corporation Uses Activity-Based Costing to Assign Overhead Costs to Products