Zang Manufacturing Company manufactures two products (A and B). The overhead costs (£58,000) have been divided into three cost pools that use the following activity cost drivers: $\begin{array}{cccc}
&&\text { Number of Labour }\
\underline{\text { Product }}&\underline{\text { Number of Orders }} & \underline{\text { Transactions }} & \underline{ \text { Labour Hours }}\
\text { A } & 15 & 50 & 500 \
\text {B }& 10 & 150 & 2,000 \
& & & \
\text { Cost per pool } & £ 10,000 & £ 8,000 & £ 40,000
\end{array}$
What is the allocation rate per order using ABC?
A)£10,000
B)£2,320
C)£400
D)£58,000

Question

Zang Manufacturing Company manufactures two products (A and B). The overhead costs (£58,000) have been divided into three cost pools that use the following activity cost drivers: $\begin{array}{cccc}
&&\text { Number of Labour }\
 \underline{\text { Product }}&\underline{\text { Number of Orders }} & \underline{\text { Transactions }} & \underline{ \text { Labour Hours }}\
\text { A } & 15 & 50 & 500 \
\text {B }& 10 & 150 & 2,000 \
& & & \
\text { Cost per pool } & £ 10,000 & £ 8,000 & £ 40,000
\end{array}$
 What is the allocation rate per order using ABC?
A)£10,000
B)£2,320
C)£400
D)£58,000

Quizplus · Accepted Answer

The allocation rate per order using Activity-Based Costing (ABC) is calculated by dividing the total cost of the order pool (£10,000) by the total number of orders (15 orders for Product A + 10 orders for Product B = 25 orders). Therefore, £10,000 / 25 orders = £400 per order.

Zang Manufacturing Company Manufactures Two Products (A and B) What Is the Allocation Rate Per Order Using ABC? A)£10,000

Zang Manufacturing Company Manufactures Two Products (A and B) What Is the Allocation Rate Per Order Using ABC?
A)£10,000