2. (Show Work) Goold Corporation uses activity-based costing to compute product

Question

2. (Show Work) Goold Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools-Machining, Order Filling, and Other. The costs in those activity cost pools appear below: Machining $3200 Order Filling $7600 Other $5200 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: MHs (Machining) Orders (Order filling) Product R9 3900 700 Product H2 16100 1300 Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins. Sales and Direct Cost Data Product R9 Product H2 Sales (total) $28,200 $36,800 Direct Materials $17300 $13500 Direct labor $6700 $13500 The activity rate for Machining under activity-based costing is closest to: A. $0.11 per MH B. $0.80 per MH C. $0.16 per MH D. $1.43 per MH

Explanation / Answer

Total machine hrs = 3900 + 16100 =20000 MH activity rate for Machining = $3200/20000 MH = $0.16 per MH C. $0.16 per MH

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