Vontungeln Corporation Uses Activity-Based Costing to Compute Product Margins

question 1

Multiple Choice

Vontungeln Corporation uses activity-based costing to compute product margins.In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption.Data to perform these allocations appear below: In the second stage, 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. Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins. The activity rate for the Machining activity cost pool under activity-based costing is closest to:

• A)$1.60 per MH
• B)$1.62 per MH
• C)$0.67 per MH
• D)$3.40 per MH

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