Zumbrunnen Corporation uses activity-based costing to compute product margins. O

Question

Zumbrunnen Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools—Processing, Supervising, and Other. The costs in those activity cost pools appear below:

Machining: $29,200 ÷ 10,000 MHs = $2.92 per MH
Order Filling: $5,100 ÷ 1,000 orders = $5.10 per order
Overhead cost for Product S4:

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:

Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.

The activity rate for the Supervising activity cost pool under activity-based costing is closest to?

Processing $ 9,000 Supervising $ 46,800 Other $ 26,200

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:

MHs (Processing) Batches (Supervising) Product M2 4,800 700 Product H2 15,200 300 Total 20,000 1,000

Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.

Product M2 Product H2 Sales (total) $ 189,900 $ 166,100 Direct materials (total) $ 96,700 $ 65,400 Direct labor (total) $ 52,500 $ 73,000

The activity rate for the Supervising activity cost pool under activity-based costing is closest to?

Explanation / Answer

Activity rate for supervising activity cost pool :

Supervising activity cost = 46800/1000 = 46.80 per Batch

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