Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below:Overhead costs: Equipment depreciation$92,000Supervisory expense$4,000??Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools MachiningOrder FillingOtherEquipment depreciation0.600.200.20Supervisory expense0.300.200.50In the second stage, 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

Question

activity cost pool are not assigned to products.Activity: MHs (Machining)Orders (Order Filling)Product W14,200800Product M015,800200Total20,0001,000Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.Sales and Direct Cost Data: Product W1Product M0Sales (total)$236,500$262,000Direct materials (total)$90,900$123,900Direct labor (total)$110,400$76,100The activity rate for the Machining activity cost pool under activity-based costing is closest to:

A. $4.80 per MH
B. $2.82 per MH
C. $1.50 per MH
D. $2.76 per MH

Answer 1

Answer: B