Question
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:
Processing$4,940
Supervising$32,000
Other$11,000
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 M0 | 12,350 | 800 |
| Product M5 | 650 | 800 |
| Total | 13,000 | 1,600 |
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
| Product M0 | Product M5 | |||
| Sales (total) | $ | 80,400 | $ | 92,900 |
| Direct materials (total) | $ | 29,100 | $ | 32,000 |
| Direct labor (total) | $ | 28,400 | $ | 42,300 |
The activity rate for the Supervising activity cost pool under activity-based costing is closest to:
Answers
Answer
- Requirement: Supervising activity’s Activity rate
- Calculation:
>Supervising cost = $ 32,000
>Supervising activity driver = 1600 batches.
>Activity rate = $ 32000 / 1600
= $ 20 per batch- Answer
= $ 20 per batch.
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