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 Activity Estimated Pools Measures Overhead Cost ($) Product Product Total A6 15 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 $431,049 The activity rate for the Order Size activity cost pool under activity-based costing is: A. $19.78 per MH B. $59.44 per MH C. $35.95 per MH D. $15.30 per MH

Cornerstones of Cost Management (Cornerstones Series)
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Chapter12: Activity-based Management
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Problem 14E: Sanford, Inc., has developed value-added standards for four activities: purchasing parts, receiving...
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Strama, inc. Manufactures and sells two products: Product A6 and Product I5.

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 Activity
Estimated
Pools
Measures
Overhead Cost ($) Product
Product
Total
A6
15
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
$431,049
The activity rate for the Order Size activity cost pool under activity-based
costing is:
A. $19.78 per MH
B. $59.44 per MH
C. $35.95 per MH
D. $15.30 per MH
Transcribed Image Text:Strama, Inc., manufactures and sells two products: Product A6 and Product 15. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Expected Activity Activity Cost Activity Estimated Pools Measures Overhead Cost ($) Product Product Total A6 15 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 $431,049 The activity rate for the Order Size activity cost pool under activity-based costing is: A. $19.78 per MH B. $59.44 per MH C. $35.95 per MH D. $15.30 per MH
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