Koutz Corporation Uses Activity-Based Costing to Compute Product Margins

question 54

Multiple Choice

Koutz 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 Processing activity cost pool under activity-based costing is closest to:

• A)$9.40 per MH
• B)$0.63 per MH
• C)$3.56 per MH
• D)$3.61 per MH

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