Zumbrunnen Corporation Uses Activity-Based Costing to Compute Product Margins

question 52

Multiple Choice

Zumbrunnen 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)$8.00 per batch
• B)$26.67 per batch
• C)$46.80 per batch
• D)$82.00 per batch

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Definitions:

Cost Differences

The discrepancies in the amount of money required to produce or obtain goods and services between different companies or regions.

Collusion

Collusion is an agreement between competitors to limit competition and manipulate market variables such as prices or output, often in order to increase profit margins at the expense of consumers.

Demand Curves

Graphical representations showing the relationship between the price of a good and the quantity demanded.

World Markets

The aggregate of all geographical markets where goods, services, and financial assets are traded internationally.