Munar Corporation uses activity-based costing to compute product margins.Overhead costs have already been allocated to the company's three activity cost pools-Machining, Order Filling, and Other.The costs in those activity cost pools appear below: 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: Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins. The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:
A)$1.00 per order
B)$1.11 per order
C)$15.70 per order
D)$27.00 per order

Question

Munar Corporation uses activity-based costing to compute product margins.Overhead costs have already been allocated to the company's three activity cost pools-Machining, Order Filling, and Other.The costs in those activity cost pools appear below:  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:  Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.  The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:
A)$1.00 per order 
B)$1.11 per order 
C)$15.70 per order 
D)$27.00 per order

Quizplus · Accepted Answer

Total orders = 100 orders + 900 orders = 1, 000 orders
Order Filling: $15, 700 ÷ 1, 000 orders = $15.70 per order

Munar Corporation Uses Activity-Based Costing to Compute Product Margins