Mussenden Corporation has an activity-based costing system with three activity cost pools-Machining, Order Filling, and Other.In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption.Data used in the first stage allocations follow: 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 for the company's two products follow: The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:
A)$2.86 per order
B)$49.00 per order
C)$5.10 per order
D)$2.00 per order

Question

Mussenden Corporation has an activity-based costing system with three activity cost pools-Machining, Order Filling, and Other.In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption.Data used in the first stage allocations follow:   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 for the company's two products follow:  The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:
A)$2.86 per order 
B)$49.00 per order 
C)$5.10 per order 
D)$2.00 per order

Quizplus · Accepted Answer

Order Filling: $5, 100 ÷ 1, 000 orders = $5.10 per order

Mussenden Corporation Has an Activity-Based Costing System with Three Activity