A Company Uses Activity-Based Costing to Determine the Costs of Its

question 146

Multiple Choice

A company uses activity-based costing to determine the costs of its three products: A,B and C.The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

How much overhead will be assigned to Product B using activity-based costing?

• A) $56,500
• B) $78,000
• C) $62,500
• D) $197,000
• E) $70,000

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Definitions:

Accounts Payable

The total sum a business must pay to its suppliers or creditors for products and services obtained on credit.

Inventory

Goods and materials that a business holds for the ultimate goal of resale, production, or utilization in manufacturing.

Receivable Turnover

A financial metric indicating how efficiently a company collects revenue from its credit customers by measuring the number of times average accounts receivable are collected during a period.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.