Groch Corporation Uses Activity-Based Costing to Compute Product Margins

question 41

Multiple Choice

Groch 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)$3.50 per batch
• B)$28.50 per batch
• C)$3.68 per batch
• D)$2.85 per batch

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Definitions:

Deadweight Loss

The inefficiency in economics that emerges when there is a failure to achieve or an inability to achieve equilibrium for any good or service.

Bread

A staple food made from dough of flour and water, usually by baking, and a common component of many diets worldwide.

Donuts

A type of fried dough confection or dessert food, often circular, with a hole in the center and various toppings or fillings.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in its price, income levels, or other factors.