Glassey Corporation uses activity-based costing to assign overhead costs to products.Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $20, 000;Supervising, $33, 500;and Other, $16, 500.Processing costs are assigned to products using machine-hours (MHs)and Supervising costs are assigned to products using the number of batches.The costs in the Other activity cost pool are not assigned to products.Activity data appear below: The activity rate for the Processing activity cost pool under activity-based costing is closest to:
A)$2.50 per MH
B)$2.00 per MH
C)$7.00 per MH
D)$1.95 per MH

Question

Glassey Corporation uses activity-based costing to assign overhead costs to products.Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $20, 000;Supervising, $33, 500;and Other, $16, 500.Processing costs are assigned to products using machine-hours (MHs)and Supervising costs are assigned to products using the number of batches.The costs in the Other activity cost pool are not assigned to products.Activity data appear below:  The activity rate for the Processing activity cost pool under activity-based costing is closest to:
A)$2.50 per MH 
B)$2.00 per MH 
C)$7.00 per MH 
D)$1.95 per MH

Quizplus · Accepted Answer

Processing: $20, 000 ÷ 10, 000 MHs = $2.00 per MH

Glassey Corporation Uses Activity-Based Costing to Assign Overhead Costs to Products.Overhead