Fargo Corporation Uses an Activity-Based Costing System with Three Activity

question 27

Multiple Choice

Fargo Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs: The distribution of resource consumption across the three activity cost pools is given below:
If the company chooses machine hours as its cost driver for the fabrication cost pool, and there were 22,000 machine hours in the year, the cost per machine hour for fabrication is closest to?

• A) $7.41
• B) $7.32
• C) $8.14
• D) $7.53

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Definitions:

Arousal Approach

a theory in psychology that focuses on how arousal levels affect performance, suggesting an optimal level of arousal for peak performance depending on the task complexity.

William McDougall

A psychologist known for his work on instinct theory and social psychology, advocating for the inclusion of innate tendencies in explaining behavior.

Human Instincts

Innate, biologically determined behaviors that are present at birth, driving individuals towards certain actions or responses without the need for learning, such as the instinct for survival.

Extrinsic Motivation

Motivation that is driven by external rewards such as money, fame, grades, or praise rather than internal factors.