Meester Corporation Has an Activity-Based Costing System with Three Activity

question 19

Multiple Choice

Meester Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Distribution of Resource Consumption Across Activity Cost Pools:
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 for the company's two products follow:
Activity:
The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:

• A) $8.00 per order
• B) $13.33 per order
• C) $10.40 per order
• D) $104.00 per order

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Definitions:

Risk of Loss

The legal responsibility regarding who bears the financial burden if goods are damaged or lost during transaction or shipment.

Destroyed

To have been made unusable or ruined beyond repair.

Performance

In contract law, performance refers to the fulfillment of a contractual duty, as promised in a contract.

Place of Delivery

The specific location agreed upon by the parties in a contract where goods are to be delivered or services are to be provided.