Heathex Manufacturing Company manufactures two products (I and II). The overhead costs ($36,200) have been divided into three cost pools that use the following activity drivers: $\begin{array}{lccc}
&&\text { Number of Labor }\
\text { Product } & \text {Number of Orders } & \text { Transactions } &\text { Labor Hours }\
\hline I& 12 & 35 & 290 \
II & 8&125&1,250 \
\text { Cost per pool } & \$ 10,200 & \$ 6,000 & \$ 20,000
\end{array}$ What is the allocation rate per labor transaction using activity-based costing (ABC) system? (Round the answer to two decimal places.)
A)$75.55
B)$68.97
C)$291.43
D)$37.50

Question

Heathex Manufacturing Company manufactures two products (I and II). The overhead costs ($36,200) have been divided into three cost pools that use the following activity drivers: $\begin{array}{lccc} 
&&\text { Number of Labor }\
\text { Product  } & \text {Number of Orders } & \text { Transactions } &\text { Labor Hours }\
\hline I& 12 & 35 & 290 \
II & 8&125&1,250 \
\text { Cost per pool } & \$ 10,200 & \$ 6,000 & \$ 20,000
\end{array}$ What is the allocation rate per labor transaction using activity-based costing (ABC) system? (Round the answer to two decimal places.)
A)$75.55
B)$68.97
C)$291.43
D)$37.50

Quizplus · Accepted Answer

The allocation rate per labor transaction is calculated by dividing the total cost of the pool by the total number of transactions. Here, the cost for the transactions pool is $6,000, and the total number of transactions is 35 + 125 = 160. Thus, the allocation rate is $6,000 / 160 = $37.50.

Heathex Manufacturing Company Manufactures Two Products (I and II) What Is the Allocation Rate Per Labor Transaction Using Activity-Based