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Goold Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools-Machining, Order Filling, and
Goold Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools-Machining, Order Filling, and Other. The costs in those activity cost pools appear below: Machining ............. 53.200 Order Filling ......... $7.600 Other ..................... $5.200 Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Machining) Orders (Order Filling) Product R9 .......... 3,900 700 Product H2 .......... 16.100 1300 Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins. Sales and Direct Cost Data: Product R9 Product H2 Sales (total) ....................................... 828.200 336.800 Direct materials (total) ..................... 517.300 513.500 Direct labor (total) ............................ 36.700 513.500 The activity rate for Machining under activitybased costing is closest to: $0.11 per MH $0.80 per MH $0.16 per MH $1.43 per MH
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