Compton Corporation The following overhead cost information is available for Compton Corporation for 2011:
During the year, 5,000 purchase orders were issued; 20,000 shipments were received; 3,000 machine setups were performed; and 4,000 inspections were conducted.
Refer to the Compton Corporation information above. What is the overhead rate for the receiving activity?
A) $1.88 per shipment received
B) $6.00 per shipment received
C) $3.00 per shipment received
D) $0.33 per shipment received

Question

Compton Corporation The following overhead cost information is available for Compton Corporation for 2011:
 During the year, 5,000 purchase orders were issued; 20,000 shipments were received; 3,000 machine setups were performed; and 4,000 inspections were conducted.
Refer to the Compton Corporation information above. What is the overhead rate for the receiving activity?
A) $1.88 per shipment received 
B) $6.00 per shipment received 
C) $3.00 per shipment received 
D) $0.33 per shipment received

Quizplus · Accepted Answer

To calculate the overhead rate for the receiving activity, we divide the total overhead cost ($60,000) by the total number of shipments received (20,000).

Overhead rate for receiving activity = Total overhead cost / Total number of shipments 
= $60,000 / 20,000 
= $3.00 per shipment received

Therefore, the correct answer is choice C.

Compton Corporation the Following Overhead Cost Information Is Available for Compton