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Renly 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.
Renly 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 Supervising Other $ 4,025 $30,420 $10,700 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: Product MO Product M5 Batches MHs (Processing) (Supervising) 10,900 650 600 650 11,500 1,300 Total Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins Product MO Product M5 $ 78,000 $ 91,400 Sales (total) Help Save & Exit 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: Product MO Product M5 Batches MHs (Processing) (Supervising) 10,900 650 600 650 Total 11,500 1,300 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 MO Product M5 $ 78,000 $ 91,400 $ 28,800 $ 31,700 $ 28,100 $ 42,000 The activity rate for the Supervising activity cost pool under activity-based costing is closest to: $31.63 per batch $6.19 per batch $26.50 per batch $23.40 per batch
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