Strama, Inc., manufactures and sells two products: Product A6 and Product I5. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Estimated | Expected Activity | |||||
Activity Cost Pools | Activity Measures | Overhead Cost | Product A6 | Product I5 | Total | |
Labor-related | DLHs | $ | 196,138 | 8,700 | 3,300 | 12,000 |
Production orders | orders | 47,124 | 1,150 | 1,350 | 2,500 | |
Order size | MHs | 188,147 | 6,100 | 6,200 | 12,300 | |
$ | 431,409 | |||||
The activity rate for the Order Size activity cost pool under activity-based costing is closest to:
Multiple Choice
$19.78 per MH
$59.44 per MH
$35.95 per MH
$15.30 per MH
Solution: | ||||
Activity cost pools | Activity measures | Estimated overhead costs | Expected activity (Total) | Activity rate $ |
Labor-related | DLHs | $196,138 | 12000 | $16.34 per direct labor hour |
Production orders | orders | 47124 | 2500 | $18.85 per order |
Order size | MHs | 188147 | 12300 | $ 15.30 per MH |
Therefore, The activity rate for the Order Size activity cost pool under activity-based costing is closest to $15.30 per MH |
Strama, Inc., manufactures and sells two products: Product A6 and Product I5. The company has an...
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Strama, Inc., manufactures and sells two products: Product A6 and Product I5. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product A6 Product I5 Total Labor-related DLHs $ 189,138 8,000 2,600 10,600 Production orders orders 43,624 800 1,000 1,800 Order size MHs 181,147 5,400 5,500 10,900 $ 413,909 The activity rate for the Order Size activity cost pool under activity-based...
Strama, Inc., manufactures and sells two products Product A6 and Product 15. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Expected Activity Activity Cost Pools Labor-related Production orders Order size Activity Measures DLHS orders MHS Estimated Overhead Cost $190,138 44,124 182,147 $416,409 Product A6 8,100 850 5,500 Product 15 2,700 1,050 5,600 Total 10,800 1,900 11,100 The activity rate for the Order Size activity cost pool under activity based costing...
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