The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period.

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Using activity-based costing for assigning overhead costs, the activity rate for quality inspections is:
A) $60 per inspection
B) $80 per inspection
C) $120 per inspection
D) $240 per inspection
E) $100 per inspection

Question

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period.

- 
Using activity-based costing for assigning overhead costs, the activity rate for quality inspections is:
A) $60 per inspection 
B) $80 per inspection 
C) $120 per inspection 
D) $240 per inspection 
E) $100 per inspection

Quizplus · Accepted Answer

To determine the activity rate for quality inspections, we divide the total cost of $24,000 by the total number of inspections, which is 200 (60 for product A + 140 for product B). This gives an activity rate of $120 per inspection. Therefore, the correct answer is C.

The Homer Corporation Produces Two Products, and Reports the Following