Meester Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

Overhead costs:

Equipment depreciation	$	86,200
Supervisory expense	$	8,200

Distribution of Resource Consumption Across Activity Cost Pools:

	Activity Cost Pools
	Machining	Order Filling		Other
Equipment depreciation	0.60	0.20		0.20
Supervisory expense	0.60	0.10		0.30

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 for the company's two products follow:

Activity:

	MHs (Machining)	Orders (Order Filling)
Product M0	1,950	680
Product H2	9,670	1,850
Total	11,620	2,530

The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:

Multiple Choice

• $7.14 per order

• $4.57 per order

• $4.14 per order

• $71.40 per order

Question 2

Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

• Sales are budgeted at $370,000 for November, $350,000 for December, and $340,000 for January.
• Collections are expected to be 55% in the month of sale and 45% in the month following the sale.
• The cost of goods sold is 70% of sales.
• The company would like to maintain ending merchandise inventories equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $24,300.
• Monthly depreciation is $15,300.
• Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	20,300
Accounts receivable		70,300
Merchandise inventory		155,400
Property, plant and equipment, net of $572,300 accumulated depreciation		1,094,300
Total assets	$	1,340,300
Liabilities and Stockholders' Equity
Accounts payable	$	254,300
Common stock		820,300
Retained earnings		265,700
Total liabilities and stockholders' equity	$	1,340,300

Expected cash collections in December are:

Multiple Choice

• $166,500

• $192,500

• $350,000

• $359,000