Sorice Corporation Uses Activity-Based Costing to Assign Overhead Costs to Products

question 150

Multiple Choice

Sorice 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, $20,200; Supervising, $11,000; and Other, $66,800. 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: The activity rate for the Supervising activity cost pool under activity-based costing is closest to:

• A) $7.50 per batch
• B) $6.00 per batch
• C) $11.00 per batch
• D) $98.00 per batch

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Definitions:

Throughput

The time required to move orders through the production process, from receipt to delivery.

Rated Capacity

The maximum amount of output that a system, facility, or machine is designed to produce under specified conditions.

Expected Output

The anticipated quantity or result produced by a process or system within a certain period.

Fixed Costs

Costs that do not change with the level of output or sales, such as rent, salaries, and insurance premiums, over a specified period.