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

question 219

Multiple Choice

Reck 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: Machining, $11,700; Order Filling, $17,800; and Other, $13,500. 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 appear below: The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:

• A) $43.00 per order
• B) $7.50 per order
• C) $6.00 per order
• D) $17.80 per order

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Definitions:

Labor Force

The total number of people employed or seeking employment in an economy at a given time.

Capital

Financial assets or the financial value of assets, such as cash and goods, used by a business to produce goods or services and achieve its objectives.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, like labor.

Wage Rate

The standard amount of pay given for work performed, typically expressed as an amount per hour or per task completed.