Asked by Larry Egerton on May 16, 2024
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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, $27,200; Supervising, $9,300; and Other, $9,500. 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:
A) $2.30 per MH
B) $1.35 per MH
C) $1.36 per MH
D) $0.40 per MH
Activity Rate
It is a measure used in activity-based costing to allocate overhead costs to products or services, based on the activities that go into producing them.
Processing Activity
Tasks or operations involved in transforming raw materials into finished goods or services, often part of the production process.
Activity-Based Costing
A costing methodology that assigns expenses to products or services based on the activities that go into their production or delivery.
- Determine activity rates across diverse activity cost pools in Activity-Based Costing.
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Learning Objectives
- Determine activity rates across diverse activity cost pools in Activity-Based Costing.
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