Accola Company Uses Activity-Based Costing

question 53

Multiple Choice

Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. There are three activity cost pools, with estimated costs and expected activity as follows:



-If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the prefab barns? (Round off your answer to the nearest whole dollar.)

• A) $109,395
• B) $48,620
• C) $125,238
• D) $68,640

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Definitions:

Ordinary Course

Activities or transactions that are regular, customary, and in keeping with the normal operations of a business or individual’s day-to-day life.

Durable Goods

Consumer goods that have a long life span (over three years) and are used over time, such as cars or appliances.

Farm Products

Goods that are derived from agriculture, including crops and livestock.

Financing Statement

A document filed to give public notice that a lender has a security interest in the collateral offered by a borrower.