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

question 154

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:

Asset

Assets possessed by a corporation that hold financial worth and can yield advantages in the future.

Receiving Report

A document prepared by the receiving department to record and confirm the delivery of goods from a supplier.

Condition of Goods

The physical state or quality of items or products being sold, traded, or transported.

Quantity Received

The total number of units of a product or goods received from a supplier.