Calculate Activity Rate For Processing Activity

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Question

Umanzor Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $48,800; Supervising, $36,700; and Other, $26,600. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:

	MHs (Processing)	Batches (supervising)
Product S5	17,700	1,690
Product F5	640	610
Total	18,340	2,300

The activity rate for the Processing activity cost pool under activity-based costing is closest to:

a. $2.34 per MH

b. $2.96 per MH

c. $2.66 per MH

d. $7.09 per MH

Summary

The question belongs to Accounting and it discusses about calculation of activity rate for processing activity cost pool.

Total Word Count 11

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