Mirabile Corporation Uses Activity-Based Costing to Compute Product Margins

question 218

Multiple Choice

Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below: Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
The activity rate for the Supervising activity cost pool under activity-based costing is closest to:

• A) $37.47 per batch
• B) $31.80 per batch
• C) $24.80 per batch
• D) $14.00 per batch

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Definitions:

Taste Buds

Sensory organs located on the tongue and in the oral cavity that are responsible for perceiving taste.

Absorbed

The process by which substances are taken up by a tissue, such as the absorption of nutrients by the digestive tract.

Lingual Frenulum

A small fold of mucous membrane that extends from the floor of the mouth to the midline of the underside of the tongue.

Buccinator Muscle

A facial muscle that acts to press the cheeks against the teeth and is used in actions such as blowing and chewing.