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:

Illusory Promise

A statement that appears to be a promise but does not actually bind the party to any obligation, making it unenforceable as a contract.

Liquidated Debt

A debt or claim whose precise monetary value has been determined, acknowledged, or agreed upon by all involved parties.

Performance

The act of carrying out or accomplishing an action, task, or function.

Equitable Principles

Principles based on fairness, morality, and justice rather than strict rules of law.