Leaper Corporation Uses an Activity-Based Costing System with the Following

question 199

Multiple Choice

Leaper Corporation uses an activity-based costing system with the following three activity cost pools: The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs.The company has provided the following data concerning its costs:
The distribution of resource consumption across activity cost pools is given below:
The activity rate for the Order Processing activity cost pool is closest to:

• A) $1,485 per order
• B) $1,540 per order
• C) $1,465 per order
• D) $1,320 per order

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Definitions:

Overhead Rate

A measure used in cost accounting to allocate overhead costs to produced units, typically expressed as a percentage or a ratio.

Predetermined Overhead Rate

A rate calculated before the period begins, used to allocate manufacturing overhead costs to individual units of production based on a specific activity base.

Direct Labor Costs

Expenses related to employees who are directly involved in the production of goods or services, as opposed to administrative or managerial staff.

Factory Overhead

Indirect costs associated with manufacturing, including utilities, maintenance, and salaries of supervisors, not directly involved in production.