Portofino Corporation Uses the Following Activity Rates from Its Activity-Based

question 69

Multiple Choice

Portofino Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: $\begin{array}{llr}\text { Activity Cost Pools } & \text {Activity Rate }\\ \text { Setting up batches} & \text {\$ 79.50 per batch}\\ \text {Processing customer orders } & \text {\( \$ 71.31 \) per customer order}\\ \text { Assembling products } & \text {\( \$ 7.06 \) per assembly hour}\\\end{array}$


$\text { Data concerning two products appear below: }$

$\begin{array}{lrr}&\text { Product KJ22}&\text { Product KL 37}\\\text { Number of batches } & 69 & 12 \\\text { Number of customer orders } & 20 & 9 \\\text { Number of assembly orders } & 492 & 697\end{array}$
- How much overhead cost would be assigned to Product KL37 using the activity-based costing
System?

• A) $5,874.82
• B) $10,385.22
• C) $6,516.61
• D) $5,562.61
• E) $1,595.79

---

Definitions:

Market Recognition

The degree to which a company or product is known and acknowledged by potential customers and the wider market.

Breakeven Point

The moment when total costs and total revenues are exactly equal, meaning that a business or project is neither making a profit nor experiencing a loss.

Variable Costs

Costs that change in proportion to the level of goods or services produced.

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance premiums.