Hochberg Corporation Uses an Activity-Based Costing System with the Following

question 128

Multiple Choice

Hochberg Corporation uses an activity-based costing system with the following three activity cost pools: The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs. The company has provided the following data concerning its costs: The distribution of resource consumption across activity cost pools is given below: The activity rate for the Fabrication activity cost pool is closest to:

• A)$5.30 per machine-hour
• B)$3.60 per machine-hour
• C)$7.20 per machine-hour
• D)$4.80 per machine-hour

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Definitions:

Derivative

A contract that changes value in response to an underlying variable, requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors, and is settled at a future date.

Primary

Refers to being of first importance; main or most significant in terms of consideration or development.

Non-Derivative

A non-derivative is a financial instrument without any underlying assets; its value is determined by the instrument itself, such as stocks or bonds, as opposed to derivatives like options or futures.

Derivative

A financial instrument whose value is derived from the value of another asset, which can include options, futures, and swaps.