Yang Manufacturing Company manufactures two products (A and B). The overhead costs ($58,000) have been divided into three cost pools that use the following activity drivers:
$\begin{array}{ccrr}
&&\text { Number of Labour }\
\underline{\text { Product }}&\underline{\text { Number of Orders }} & \underline{\text { Transactions }} & \underline{\text { Labour Hours }}\
\text { A } & 15 & 50 & 500 \
\text {B} & 10 & 150 & 2,000 \\
\text { Cost per pool } & \$ 10,000 & \$ 8,000 & \$ 40,000
\end{array}$

-Refer to the figure.What is the allocation rate per order using ABC?
A)$400
B)$2,320
C)$10,000
D)$58,000

Question

Yang Manufacturing Company manufactures two products (A and B). The overhead costs ($58,000) have been divided into three cost pools that use the following activity drivers:
$\begin{array}{ccrr}
&&\text { Number of Labour }\
 \underline{\text { Product }}&\underline{\text { Number of Orders }} & \underline{\text { Transactions }} & \underline{\text { Labour Hours }}\
\text { A } & 15 & 50 & 500 \
\text {B} & 10 & 150 & 2,000 \\
\text { Cost per pool } & \$ 10,000 & \$ 8,000 & \$ 40,000
\end{array}$

-Refer to the figure.What is the allocation rate per order using ABC?
A)$400
B)$2,320
C)$10,000
D)$58,000

Quizplus · Accepted Answer

The allocation rate per order using Activity-Based Costing (ABC) is calculated by dividing the total cost of the cost pool by the total number of orders. For orders, the cost pool is $10,000 and the total number of orders is 25 (15 orders for Product A + 10 orders for Product B). Therefore, the allocation rate per order is $10,000 / 25 = $400.

Yang Manufacturing Company Manufactures Two Products (A and B) -Refer to the Figure