Lysiak Corporation Uses an Activity Based Costing System to Assign

question 317

Multiple Choice

Lysiak Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment depreciation and supervisory expense-are allocated to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Distribution of Resource Consumption Across Activity Cost Pools:
In the second stage, 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 Machining activity cost pool under activity-based costing is closest to:

• A) $18.00 per MH
• B) $5.30 per MH
• C) $2.82 per MH
• D) $3.18 per MH

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Definitions:

Retractors

Surgical instruments used to separate the edges of a surgical incision or wound, or to hold back underlying organs and tissues so that body parts under the incision may be accessed.

Clamping

The action of securing objects tightly together using a clamp to hold, support, or compress them during various operations or processes.

Grasping

The action of seizing or holding firmly, often used in contexts of manipulation of objects or tools.

Cutting

The act of severing or dividing something with a sharp instrument.