Question

Wedd 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, $51,700; Supervising, $34,500; and Other, $22,400.
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:


MHs (Processing) Batches (Supervising)
Product O6 13,400 780
Product D7 990 800
Total 14,390 1,580

The activity rate for the Processing activity cost pool under activity-based costing is closest to _____.

Answer 1

Answer:

The activity rate for the Processing activity cost pool under activity-based costing is closest to _____. $ 51,700/ 14,390= 3.592

Explanation:

Wedd Corporation

Activity         Cost             Activity Pool

Processing, $51,700; machine-hours (MHs)

Supervising, $34,500; number of batches

Other, $22,400.

                      MHs (Processing)          Batches (Supervising)

Product O6           13,400                            780

Product D7              990                             800

Total                     14,390                           1,580

Rate = Activity Cost/ Activity Pool Cost

Processing rate= $ 51,700/ 14,390= 3.592

The activity rate for the Processing activity cost pool under activity-based costing is closest to 3.592