Mciver 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: Machining, $10, 900;Order Filling, $10, 500;and Other, $75, 600.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 appear below: The activity rate for the Machining activity cost pool under activity-based costing is closest to:
A)$2.67 per MH
B)$1.09 per MH
C)$0.93 per MH
D)$9.70 per MH

Question

Mciver 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: Machining, $10, 900;Order Filling, $10, 500;and Other, $75, 600.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 appear below:  The activity rate for the Machining activity cost pool under activity-based costing is closest to:
A)$2.67 per MH 
B)$1.09 per MH 
C)$0.93 per MH 
D)$9.70 per MH

Quizplus · Accepted Answer

Total MHs = 1, 500 MHs + 8, 500 MHs = 10, 000 MHs
Machining: $10, 900 ÷ 10, 000 MHs = $1.09 per MH

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