Stroth Corporation Uses Activity-Based Costing to Compute Product Margins

question 71

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. The activity rate for Machining under activity-based costing is closest to:

• A)$0.54 per MH
• B)$4.00 per MH
• C)$0.34 per MH
• D)$2.10 per MH

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