Groch Corporation Uses Activity-Based Costing to Compute Product Margins

question 41

Multiple Choice

Groch 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 Supervising activity cost pool under activity-based costing is closest to:

• A)$3.50 per batch
• B)$28.50 per batch
• C)$3.68 per batch
• D)$2.85 per batch

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Definitions:

Formula

A concise way of expressing information symbolically, as in a mathematical or chemical formula.

Extraneous Solutions

Solutions that emerge from the process of solving the problem but do not satisfy the original equation.

Inversely

A relationship between two variables in which one increases as the other decreases, often described by an inverse proportion or relation.

Tenth Power

Raising a number to the tenth power means multiplying the number by itself nine more times.