Mirabile Corporation uses activity-based costing to compute product margins. Ove

Question

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 ? 6,300 Supervising $22,320 Other $11,400 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 Batches (Processing) (Supervising) Product MO Product M5 Total 14,250 750 15,000 450 450 900 Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins Sales (total) Direct materials (total) Direct labor (total) Product MOProduct M5 $ 82,600 94,900 $ 29,500 32,400 $ 28,800 42,700 The activity rate for the Supervising activity cost pool under activity-based costing is closest to

Explanation / Answer

Ans. $24.80 per batch

*Calculation:

Activity rate = Supervising / Total batches

= 22320 / 900

= 24.8 per batch

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