Wedd Corporation uses activity-based costing to assign overhead costs to product

Question

Wedd 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: Processing, $50,000; Supervising, $33,100; and Other, $22,400. 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:

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

MHs (Processing) Batches (Supervising) Product O6 13,400 780 Product D7 990 800 Total 14,390 1,580

Explanation / Answer

Pocessing, = $50,000

Processing costs are assigned to products using machine-hours =14390 hr

The activity rate for the Processing activity =50000/14390 =$3.47 Per Hr

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