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:

Subordinates

Employees or team members who are lower in rank or position and are typically under the direction of a manager or supervisor.

Mechanistic Designs

Mechanistic designs in organizations are structured, hierarchical, and bureaucratic systems, characterized by clear, rigid divisions of labor and centralization of decision-making.

Tight Structures

Organizational frameworks characterized by strict rules, procedures, and hierarchical relationships intended to ensure control and order.

Horizontal Form

An organizational structure that emphasizes teamwork and collaboration across departments without a strict hierarchy.