Millner Corporation Has Provided the Following Data from Its Activity-Based

question 72

Multiple Choice

Millner Corporation has provided the following data from its activity-based costing accounting system: The activity rate for the Designing Products activity cost pool is closest to:

• A)$101 per product design hour
• B)$1,372,448 per product design hour
• C)$176 per product design hour
• D)$57 per product design hour

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs, both fixed and variable, in the cost of a product.

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Excess Capacity

The amount by which the actual production of a company exceeds its planned production capacity.

Variable Production Costs

Expenses that change in direct proportion to the level of production output.