For Its Inspecting Cost Pool, Davidson, Inc

question 146

Multiple Choice

For its inspecting cost pool, Davidson, Inc.expected overhead cost of $300,000 and 4,000 inspections.The actual overhead cost for that cost pool was $360,000 for 5,000 inspections.The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is

• A)$60 per inspection.
• B)$72 per inspection.
• C)$75 per inspection.
• D)$90 per inspection.

---

Definitions:

Variable Inputs

Variable inputs in production are those inputs that change in quantity with the level of output, such as raw materials and labor.

Inputs

The resources such as labor, materials, and capital that are used in the production process to create goods and services.

AFC

Acronym that stands for Average Fixed Cost, the fixed costs of production divided by the quantity of output produced.

ATC

Average Total Cost, which is the total cost of production divided by the number of goods produced.