Koutz 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: 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 Processing activity cost pool under activity-based costing is closest to:
A)$9.40 per MH
B)$0.63 per MH
C)$3.56 per MH
D)$3.61 per MH

Question

Koutz 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:  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 Processing activity cost pool under activity-based costing is closest to:
A)$9.40 per MH 
B)$0.63 per MH 
C)$3.56 per MH 
D)$3.61 per MH

Quizplus · Accepted Answer

Processing: $36, 100 ÷ 10, 000 MHs = $3.61 per MH

Koutz Corporation Uses Activity-Based Costing to Compute Product Margins