Brisky Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below: In the second stage, 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. Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

-The activity rate for the Machining activity cost pool under activity-based costing is closest to:
A)$1.40 per MH
B)$30.00 per MH
C)$0.70 per MH
D)$0.55 per MH

Question

Brisky Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below:

In the second stage, 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.

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

-The activity rate for the Machining activity cost pool under activity-based costing is closest to:

-The activity rate for the Machining activity cost pool under activity-based costing is closest to:
A)$1.40 per MH 
B)$30.00 per MH 
C)$0.70 per MH 
D)$0.55 per MH

Quizplus · Accepted Answer

Machining: $14,000 F1F1F1S1F1F1F10 20,000 MHs = $0.70 per MH

Brisky Corporation Uses Activity-Based Costing to Compute Product Margins