The Activity Rate for the Order Filling Activity Cost Pool

question 6

Multiple Choice

The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:

• A)$1.00 per order
• B)$1.11 per order
• C)$15.70 per order
• D)$27.00 per order

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Definitions:

Purchases On Account

Transactions where goods are bought and payment is deferred to a later date, often resulting in an accounts payable.

Accounts Payable Balance

The total amount of money a company owes to its suppliers or creditors for goods and services purchased on credit.

Unearned Revenue

Income received by a business for goods or services yet to be delivered or provided; also known as deferred revenue.

Prepaid Expense

Payments made beforehand for products or services that will be provided at a later date.