Ormond Corporation Uses Activity-Based Costing to Assign Overhead Costs to Products

question 98

Multiple Choice

Ormond Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Machining, $6,800; Order Filling, $10,700; and Other, $4,500. 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:
-The activity rate for the Machining activity cost pool under activity-based costing is closest to:

• A)$0.32 per MH
• B)$1.25 per MH
• C)$1.10 per MH
• D)$0.34 per MH

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Definitions:

Profit and Loss Ratios

Financial metrics that analyze a company's profitability, efficiency, and performance by comparing various figures from the profit and loss statement.

Capital Account Balances

The net result of public and private international investments flowing in and out of a country, including financial and capital assets.

Partnership Liquidation

The process of winding up a partnership's operations, distributing its assets to creditors and shareholders, and terminating its existence.

Legal Action

A formal proceeding in a court of law where a party seeks a legal remedy, such as the enforcement of rights, redress of grievances, or settlement of disputes.