Keske Corporation Has an Activity-Based Costing System with Three Activity

question 96

Multiple Choice

Keske Corporation has an activity-based costing system with three activity cost pools-Machining, Order Filling, and Other.In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to the three activity cost pools based on resource consumption.Data used in the first stage allocations follow: 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.Activity data for the company's two products follow: Finally, the costs of Machining and Order Filling are combined with the following sales and direct cost data to determine product margins. The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:

• A)$73.00 per order
• B)$5.00 per order
• C)$12.50 per order
• D)$22.90 per order

---

Definitions:

Domestic Production

It refers to the total value of all goods and services produced within a country's borders in a specific time period.

Domestic Export Sector

The part of a country's economy that is focused on producing goods and services for exportation to other countries.

Production Possibilities Curves

The production possibilities curve illustrates the maximum potential output combinations of two goods or services that an economy can achieve when all resources are fully and efficiently utilized.

Trading Possibilities Curves

A graphical representation that shows the maximum amounts of goods that two countries can trade with each other, given their resources and technology.