Stroth Corporation Uses Activity-Based Costing to Compute Product Margins

question 94

Multiple Choice

Stroth Corporation uses activity-based costing to compute product margins.Overhead costs have already been allocated to the company's three activity cost pools-Machining, Order Filling, and Other.The costs in those activity cost pools appear below: 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 appear below: Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins. What is the overhead cost assigned to Product C4 under activity-based costing?

• A)$6, 542
• B)$5, 292
• C)$1, 250
• D)$10, 500

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Definitions:

Purchase Decision

The process of evaluating and deciding which product or service to buy based on various factors.

Product Shift

Changes in a company's product lineup, often involving the introduction of new products or the discontinuation of existing ones, to adapt to changing market demands or strategic focuses.

Customers' Needs

Refers to the requirements and desires of consumers that a company aims to fulfill with its products or services.

Buying Center

A group of individuals within an organization who are responsible for making purchase decisions, often involving members from different departments to ensure diverse perspectives.