Manton Corporation Uses an Activity Based Costing System to Assign

question 43

Multiple Choice

Manton Corporation uses an activity based costing system to assign overhead costs to products.In the first stage, two overhead costs-equipment expense and indirect labor-are allocated to the three activity cost pools-Processing, Supervising, and Other-based on resource consumption.Data to perform these allocations appear below: In the second stage, 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 for the company's two products follow: What is the overhead cost assigned to Product Z5 under activity-based costing?

• A)$5, 280
• B)$6, 264
• C)$20, 500
• D)$11, 544

Recognize the importance of cost allocation methods and their impact on product pricing.

Identify the role of direct labor hours and machine hours in product costing and overhead allocation.

Understand the principles of absorption costing and how overhead is applied to products.

Recognize the implications of changes in production targets on cost allocation and product pricing.

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Definitions:

Categorical Data

Data that can be divided into specific groups or categories without any order.

Quantitative Data

Data that can be measured numerically, allowing for mathematical operations and statistical analysis.

Observations

Data collected during the course of a scientific study or experiment.

Variables

Elements, features, or factors that are likely to vary or change within the context of a study or experiment.