Overhead costs: Equipment expense Indirect labor $96,000 $4,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Processing Supervising Other Equipment 0.40 0.20 0.40 expense Indirect labor 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 for the company's two products follow: 0.30 0.50 0.20 Activity: Batches (Supervising) 400 MHs (Processing) Product R4 6,800 Product L2 13.200 600 20.000 1.000 Total Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins. Sales and Direct Cost Data: Product R4 Product L2 $234,600 $269,600 Sales (total) $120,200 $81,100 Direct materials (total) Direct labor (total) The activity rate for the Supervising activity cost pool under activity-based costing is closest to: $116,600 $93,200

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Lake Corporation has an activity-based costing system with three activity cost pools-Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect
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labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow:
Overhead costs:
Equipment expense
$96,000
Indirect labor
$4,000
Distribution of Resource Consumption Across Activity Cost Pools:
Activity Cost Pools
Processing
Supervising
Other
Equipment
expense
0.40
0.20
0.40
Indirect labor
0.30
0.50
0.20
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 for the company's two products follow:
Activity:
MHs (Processing)
Batches (Supervising)
400
Product R4
6,800
13,200
600
Product L2
20,000
1,000
Total
Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins.
Sales and Direct Cost Data:
Product R4
Product L2
$234,600
$269,600
Sales (total)
$120,200
$81,100
Direct materials (total)
$93,200
Direct labor (total)
The activity rate for the Supervising activity cost pool under activity-based costing is closest to:
$100.00 per batch
$6.67 per batch
$4.00 per batch
$116,600
32
30
27
26
25
24
Transcribed Image Text:kboard • Show Timer A Question Completion Status: 20 3D 40 70 10 11 120 13D 140 15 16 17 18 19 20 21 22 23 Lake Corporation has an activity-based costing system with three activity cost pools-Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect 28 29 31 33 labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs: Equipment expense $96,000 Indirect labor $4,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Processing Supervising Other Equipment expense 0.40 0.20 0.40 Indirect labor 0.30 0.50 0.20 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 for the company's two products follow: Activity: MHs (Processing) Batches (Supervising) 400 Product R4 6,800 13,200 600 Product L2 20,000 1,000 Total Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins. Sales and Direct Cost Data: Product R4 Product L2 $234,600 $269,600 Sales (total) $120,200 $81,100 Direct materials (total) $93,200 Direct labor (total) The activity rate for the Supervising activity cost pool under activity-based costing is closest to: $100.00 per batch $6.67 per batch $4.00 per batch $116,600 32 30 27 26 25 24
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