Use the following information for the next 2 questions.
Flowing Wells Corporation is preparing its annual budget. As part of its analysis of the contribution of individual products to overall profitability, the controller estimates the amount of overhead that should be assigned to the individual product lines. Budgeted inspection costs are $4,800. Additional information is as follows:
-Costs assigned to an activity pool for teaching children to swim at the county park are $2,700 per month. Number of students is chosen as the cost driver. On average, 300 students take swim lessons monthly. What is the ABC allocation rate for this activity?
A) Not enough information given
B) $27.00
C) $9.00
D) $0.90

Question

Use the following information for the next 2 questions.
Flowing Wells Corporation is preparing its annual budget. As part of its analysis of the contribution of individual products to overall profitability, the controller estimates the amount of overhead that should be assigned to the individual product lines. Budgeted inspection costs are $4,800. Additional information is as follows: 
-Costs assigned to an activity pool for teaching children to swim at the county park are $2,700 per month. Number of students is chosen as the cost driver. On average, 300 students take swim lessons monthly. What is the ABC allocation rate for this activity?
A) Not enough information given 
B) $27.00 
C) $9.00 
D) $0.90

Quizplus · Accepted Answer

The ABC allocation rate is calculated by dividing the total costs by the number of students: $2,700 / 300 = $9.00 per student.

Use the Following Information for the Next 2 Questions