Bachrodt Corporation Uses Activity-Based Costing to Compute Product Margins

question 212

Multiple Choice

Bachrodt Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below: 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
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
What is the overhead cost assigned to Product Y7 under activity-based costing?

• A) $7,992
• B) $1,480
• C) $18,000
• D) $9,472

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Definitions:

Cash Budget

Budget that shows cash inflows and outflows during a period of time.

Shareholders' Equity

The portion of a company's assets that belongs to shareholders after liabilities have been subtracted; also known as net assets or equity.

Credit Statement

A detailed report of an individual's or company's credit history and current credit standing, used by lenders to evaluate creditworthiness.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.