Roshannon Corporation Uses Activity-Based Costing to Compute Product Margins

question 21

Multiple Choice

Roshannon Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment expense and indirect labor-to 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: Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
-What is the overhead cost assigned to Product P3 under activity-based costing?

• A)$30,000
• B)$5,916
• C)$5,640
• D)$11,556

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Definitions:

Population Standard Deviation

A measure of the dispersion or spread of all values within a population, quantifying how much the values differ from the population mean.

Sample Size

The number of observations or replicates included in a statistical sample, essential for accurately estimating the population parameter.

T-Distributions

A family of probability distributions that arises when estimating the mean of a normally distributed population in situations where the sample size is small and population standard deviation is unknown.

Degrees Of Freedom

Degrees of freedom are the number of values in a final calculation of a statistic that are free to vary, often linked to the sample size.