Question

Lysiak Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs equipment depreciation and supervisory expense are allocated to three activity cast pools Machining Order Filling, and Other based on resource consumption Data to perform these allocations appear below: Overhead costs: Equipment depreciation Supervisory expense $47,000 $ 6,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling 0.60 0.10 0.60 0.20 Equipment depreciation Supervisory expense Other 0.30 0.20 In the second stage, Machining costs are assigned to products using machine-hours (MHS) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow Activity: Product C9 Product to MHS (Machining) 6,900 3.100 10,000 Orders (Order Pilling) 200 800 1,000 Total The activity rate for the Machining activity cost pool under activity based costing is closest to

Answer 1

	Machining
Equipment Depreciation	28200	=47000*0.60
Supervisory expense	3600	=6000*0.60
Total	31800
Total Machining cost	31800
Divide by Machine hours	10000
Activity rate for Machining activity	3.18	per MH