Use the following information to answer the following questions.Magnolia Company makes products B546 and C245.Information for overhead costs and for the two products appears below.The company makes 100,000 units of product B546 each year and 20,000 units of product C245.

Use the information from the Magnolia Company and assume that Activity Based Costing is used,with each activity in its own cost pool.What is the rate per setup that should be used to assign set up cost to the two products?
A)$900 per set up
B)$400 per set up
C)$100 per set up
D)$200,000 per set up

Question

Use the following information to answer the following questions.Magnolia Company makes products B546 and C245.Information for overhead costs and for the two products appears below.The company makes 100,000 units of product B546 each year and 20,000 units of product C245.

Use the information from the Magnolia Company and assume that Activity Based Costing is used,with each activity in its own cost pool.What is the rate per setup that should be used to assign set up cost to the two products?
A)$900 per set up 
B)$400 per set up 
C)$100 per set up 
D)$200,000 per set up

Quizplus · Accepted Answer

The total setup cost is $1,000,000 and the total number of setups is 5,000. Therefore, the rate per setup is $1,000,000/5,000 = $200.

Use the Following Information to Answer the Following Questions