Deck 7: Activity-Based Costing: A Tool to Aid Decision Making

Question 1

Paul Company has two products: A and B.The company uses activity-based costing.The estimated total cost and expected activity for each of the company's three activity cost pools are as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 22,000 & 400 & 100 & 500 \\\hline \text { Activity 2 } & 16,240 & 380 & 200 & 580 \\\hline \text { Activity 3 } & 14,600 & 500 & 250 & 750 \\\hline\end{array}$
The activity rate under the activity-based costing system for Activity 3 is closest to which of the following?

A) $19.47.
B) $28.87.
C) $58.40.
D) $70.45. $14,600/750 = $19.47.

Answer 1

$19.47.

Question 2

Arranging for a shipment of a number of different products to a customer is an example of an activity at which of the following levels?

A) Unit-level activity.
B) Batch-level activity.
C) Customer-level activity.
D) Organization-sustaining activity.

Answer 2

B

Question 3

Costs incurred at which of the following activity levels should NOT be allocated to products for decision-making purposes?

A) Unit-level activities.
B) Batch-level activities.
C) Product-level activities.
D) Organization-sustaining activities.

Answer 3

D

Question 4

Matt Company uses activity-based costing.The company has two products: A and B.The annual production and sales of Product A is 5,000 units and of Product B is 7,000 units.There are three activity cost pools,with estimated total cost and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$ $\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 24,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 36,000 & 700 & 200 & 900 \\\hline \text { Activity 3 } &8 1 , 2 0 0 & 8 0 0 & 3 , 0 0 & 3 , 8 0 0 \\\hline\end{array}$
The cost per unit of Product B under activity-based costing is closest to which of the following?

A) $15.60
B) $14.92
C) $16.45
D) $13.50 [(24,000/600)*400 + (36,000/900)* 200 + (81,200/3,800)* 3,000]/7,000 = $14.92.

Question 5

Which of the following is NOT a limitation of activity-based costing?

A) Maintaining an activity-based costing system is more costly than maintaining a traditional direct labour-based costing system.
B) Changing from a traditional direct labour-based costing system to an activity-based costing system changes product margins and other key performance indicators used by managers. Such changes are often resisted by managers.
C) In practice, most managers insist on fully allocating all costs to products, customers, and other costing objects in an activity-based costing system. This results in overstated costs.
D) More accurate product costs may result in increasing the selling prices of some products.

Question 6

Which of the following would be classified as a product-level activity?

A) Machine setup for a batch of a standard product.
B) Cafeteria facilities available to and used by all employees.
C) Human resource management.
D) Advertising a product.

Question 7

(Appendix 7A)Why would an activity-based costing system that is designed for internal decision making NOT conform to generally accepted accounting principles?

A) Some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.
B) Some non-manufacturing costs are assigned to products.
C) First-stage allocations may be based on subjective interview data.
D) All of the above.

Question 8

Why may departmental overhead rates NOT correctly assign overhead costs?

A) Because of the use of direct labour hours in allocating overhead costs to products rather than machine time or quantity of materials.
B) Because of the high correlation between direct labour hours and the incurrence of overhead costs.
C) Because of the over-reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production.
D) Because of the difficulties associated with identifying cost pools for the first stage of the allocation process.

Question 9

What is a duration driver?

A) A simple count of the number of times an activity occurs.
B) An activity measure that is used for the life of the company.
C) A measure of the amount of time required to perform an activity.
D) An activity measure that is used for the life of an activity-based costing system.

Question 10

Human resource management is an example of an activity at which of the following levels?

A) Unit-level activity.
B) Product-level activity.
C) Batch-level activity.
D) Organization-sustaining activity.

Question 11

Setting up equipment is an example of an activity at which of the following levels?

A) Unit-level activity.
B) Batch-level activity.
C) Product-level activity.
D) Organization-sustaining activity.

Question 12

Which of the following activity levels is an example of the clerical activity associated with processing purchase orders to produce an order for a standard product?

A) Unit-level activity.
B) Batch-level activity.
C) Product-level activity.
D) Organization-sustaining activity.

Question 13

Worker recreational facilities are examples of costs that would ordinarily be considered to be incurred at which of the following activity levels?

A) Unit-level activity.
B) Batch-level activity.
C) Product-level activity.
D) Organization-sustaining activity.

Question 14

Matt Company uses activity-based costing.The company has two products: A and B.The annual production and sales of Product A is 8,000 units and of Product B is 6,000 units.There are three activity cost pools,with estimated total cost and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 20,000 & 100 & 400 & 500 \\\hline \text { Activity 2 } & 37,000 &8 0 0& 200 & 1,000 \\\hline \text { Activity 3 } & 91,200 & 8 0 0 &3 , 0 0 0 & 3,800 \\\hline\end{array}$
The cost per unit of Product A under activity-based costing is closest to which of the following?

A) $2.40.
B) $3.90.
C) $6.60.
D) $10.59. [(20,000/500) * 100 + (37,000/1,000) * 800 + (91,200/3,800) * 800]/8,000 = $6.60.

Question 15

Which of the following statements about overhead allocation based on volume alone is correct?

A) It is a key aspect of the activity-based costing model.
B) It will systematically overcost high-volume products and undercost low-volume products.
C) It will systematically overcost low-volume products and undercost high-volume products.
D) It must be used for external financial reporting.

Question 16

Selena Company has two products: A and B.The company uses activity-based costing.The estimated total cost and expected activity for each of the company's three activity cost pools are as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$ $\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Panl }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 17,600 & 800 & 300 & 1,100 \\ \hline \text { Activity 2 } & 12,000 & 500 & 200 & 700 \\\hline \text { Activity 3 } & 26,000 & 800 & 400 & 1,200 \\\hline\end{array}$
The activity rate under the activity-based costing system for Activity 3 is closest to which of the following?

A) $18.53.
B) $21.67.
C) $46.33.
D) $65.00. $26,000/1,200 = $21.67.

Question 17

Testing a prototype of a new product is an example of an activity at which of the following levels?

A) Unit-level activity.
B) Batch-level activity.
C) Product-level activity.
D) Organization-sustaining activity.

Question 18

Bridget Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 2,000 units and of Product B is 3,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$$\begin{array} { l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 9,000 & 400 & 350 & 750 \\\hline \text { Activity 2 } & 12,000 & 100 & 400 & 500 \\\hline \text { Activity 3 } & 48,000 & 400 & 1,200 & 1,600 \\\hline\end{array}$


-The cost per unit of Product A under activity-based costing is closest to which of the following?

A) $6.00.
B) $8.63.
C) $9.60.
D) $13.80.

Question 19

Bridget Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 2,000 units and of Product B is 3,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$$\begin{array} { l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 9,000 & 400 & 350 & 750 \\\hline \text { Activity 2 } & 12,000 & 100 & 400 & 500 \\\hline \text { Activity 3 } & 48,000 & 400 & 1,200 & 1,600 \\\hline\end{array}$


-The cost per unit of Product B under activity-based costing is closest to which of the following?

A) $24.10.
B) $16.60.
C) $35.38.
D) $31.90.

Question 20

What is a transactiondriver?

A) An event that causes a transactionto begin.
B) A measure of the amount of time required to perform an activity.
C) An event that causes a transactionto end.
D) A simple count of the number of times an activity occurs.

Question 21

Dierich Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system: $\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 600,000 \\\hline \text { Selling and administrative expenses } & \underline { 220,000 } \\\hline \text { Total } & \$ 820,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} & 15 \% & 75 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 60 \% & 20 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.

-How much cost,in total,would be allocated in the first-stage allocation to the Order Size activity cost pool?

A) $123,000.
B) $222,000.
C) $307,500.
D) $492,000.

Question 22

-To the nearest whole dollar,how much wages and salaries cost would be allocated to a customer who placed eight orders in a year?

A) $7,392.
B) $9,548.
C) $11,704.
D) $14,784.

Question 23

Diehl Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 480,000 \\\hline \text { Selling and administrative expenses } & \underline { 100,000 } \\\hline \text { Total } & \$ 580,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} &5 \% & 85 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 60 \% & 20 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.



-How much cost,in total,would be allocated in the first-stage allocation to the Order Size activity cost pool?

A) $29,000.
B) $84,000.
C) $188,000.
D) $348,000.

Question 24

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of the costs to the activity cost pools.

-How much cost,in total,would be allocated in the first-stage allocation to the Customer Support activity cost pool?

A) $180,000.
B) $255,000.
C) $280,000.
D) $330,000.

Question 25

Dierich Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system: $\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 600,000 \\\hline \text { Selling and administrative expenses } & \underline { 220,000 } \\\hline \text { Total } & \$ 820,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} & 15 \% & 75 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 60 \% & 20 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.

-How much cost,in total,would be allocated in the first-stage allocation to the Customer Support activity cost pool?

A) $164,000.
B) $389,500.
C) $494,000.
D) $615,000.

Question 26

-What would be the total overhead cost per customer according to the activity-based costing system,rounded to the nearest whole dollar? In other words,what would be the overall activity rate for the Customer Support activity cost pool?

A) $11,700.
B) $12,350.
C) $12,667.
D) $13,000.

Question 27

Dierich Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system: $\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 600,000 \\\hline \text { Selling and administrative expenses } & \underline { 220,000 } \\\hline \text { Total } & \$ 820,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} & 15 \% & 75 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 60 \% & 20 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.

-How much cost,in total,should not be allocated to orders and customer support in the second stage of the allocation process if the activity-based costing system is used for internal decision making?

A) $0.
B) $82,000.
C) $104,000.
D) $164,000.

Question 28

-What would be the total overhead cost per customer according to the activity-based costing system,rounded to the nearest whole dollar? In other words,what would be the overall activity rate for the Customer Support activity cost pool?

A) $10,800.
B) $12,600.
C) $13,650.
D) $14,400.

Question 29

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of the costs to the activity cost pools.

-How much cost,in total should not be allocated to orders and customer support in the second stage of the allocation process if the activity-based costing system is used for internal decision making?

A) $0.
B) $60,000.
C) $80,000.
D) $120,000.

Question 30

Furniture Company uses an activity-based costing system in which there are three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array}{|l|r|}\hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 600,000 \\\hline \text { Selling and administrative expenses } & \underline{300,000} \\\hline \text { Total } & \$ 900,000\\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$

$\begin{array}{|l|r|r|r|r|}\hline & \text { Order Size } & \begin{array}{r}\text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array}{l}\text { Manufacturing } \\\text { overhead }\end{array} & 45 \% & 50 \% & 5 \% & 100 \% \\\hline \begin{array}{l}\text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 40 \% & 45 \% & 15 \% & 100 \% \\\hline\end{array}$

The "Other" activity cost pool consists of the costs of idle capacity and organization *
sustaining costs. You have been asked to complete the first-stage allocation of the costs to the activity cost pools.



-How much cost,in total,would be allocated in the first-stage allocation to the Customer Support activity cost pool?

A) $280,000.
B) $355,000.
C) $380,000.
D) $435,000.

Question 31

Dideda Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 360,000 \\\hline \text { Selling and administrative expenses } & \underline { 240,000 } \\\hline \text { Total } & \$ 600,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} & 25 \% & 65 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 60 \% & 20 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.



-How much cost,in total,should NOT be allocated to orders and customer support in the second stage of the allocation process if the activity-based costing system is used for internal decision making?

A) $0.
B) $60,000.
C) $84,000.
D) $120,000.

Question 32

Diehl Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 480,000 \\\hline \text { Selling and administrative expenses } & \underline { 100,000 } \\\hline \text { Total } & \$ 580,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} &5 \% & 85 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 60 \% & 20 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.



-How much cost,in total,should not be allocated to orders and customer support in the second stage of the allocation process if the activity-based costing system is used for internal decision making?

A) $0.
B) $58,000.
C) $68,000.
D) $116,000.

Question 33

Dideda Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 360,000 \\\hline \text { Selling and administrative expenses } & \underline { 240,000 } \\\hline \text { Total } & \$ 600,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} & 25 \% & 65 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 60 \% & 20 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.



-How much cost,in total,would be allocated in the first-stage allocation to the Order Size activity cost pool?

A) $150,000.
B) $234,000.
C) $255,000.
D) $360,000.

Question 34

Furniture Company uses an activity-based costing system in which there are three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array}{|l|r|}\hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 600,000 \\\hline \text { Selling and administrative expenses } & \underline{300,000} \\\hline \text { Total } & \$ 900,000\\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$

$\begin{array}{|l|r|r|r|r|}\hline & \text { Order Size } & \begin{array}{r}\text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array}{l}\text { Manufacturing } \\\text { overhead }\end{array} & 45 \% & 50 \% & 5 \% & 100 \% \\\hline \begin{array}{l}\text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 40 \% & 45 \% & 15 \% & 100 \% \\\hline\end{array}$

The "Other" activity cost pool consists of the costs of idle capacity and organization *
sustaining costs. You have been asked to complete the first-stage allocation of the costs to the activity cost pools.



-How much cost,in total,would be allocated in the first-stage allocation to the Order Size activity cost pool?

A) $210,000.
B) $240,000.
C) $390,000
D) $300,000.

Question 35

Davis Company uses an activity-based costing system in which there are three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 400,000 \\\hline \text { Selling and administrative expenses } & \underline { 200,000 } \\\hline \text { Total } & \$ 600,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} & 35 \% & 55 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 50 \% & 30 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of the costs to the activity cost pools.



-How much cost,in total,would be allocated in the first-stage allocation to the Order Size activity cost pool?

A) $210,000.
B) $240,000.
C) $255,000.
D) $300,000.

Question 36

-What would be the total overhead cost per order according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Filling Orders activity cost pool?

A) $48.00.
B) $49.67.
C) $52.00.
D) $56.00.

Question 37

Diehl Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 480,000 \\\hline \text { Selling and administrative expenses } & \underline { 100,000 } \\\hline \text { Total } & \$ 580,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} &5 \% & 85 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 60 \% & 20 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.



-How much cost,in total,would be allocated in the first-stage allocation to the Customer Support activity cost pool?

A) $116,000.
B) $304,500.
C) $428,000.
D) $493,000.

Question 38

-What would be the total overhead cost per order according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Filling Orders activity cost pool?

A) $273.00.
B) $292.50.
C) $302.00.
D) $312.00

Question 39

Furniture Company uses an activity-based costing system in which there are three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array}{|l|r|}\hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 600,000 \\\hline \text { Selling and administrative expenses } & \underline{300,000} \\\hline \text { Total } & \$ 900,000\\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$

$\begin{array}{|l|r|r|r|r|}\hline & \text { Order Size } & \begin{array}{r}\text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array}{l}\text { Manufacturing } \\\text { overhead }\end{array} & 45 \% & 50 \% & 5 \% & 100 \% \\\hline \begin{array}{l}\text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 40 \% & 45 \% & 15 \% & 100 \% \\\hline\end{array}$

The "Other" activity cost pool consists of the costs of idle capacity and organization *
sustaining costs. You have been asked to complete the first-stage allocation of the costs to the activity cost pools.



-How much cost,in total should not be allocated to orders and customer support in the second stage of the allocation process if the activity-based costing system is used for internal decision making?

A) $0.
B) $75,000.
C) $80,000.
D) $120,000.

Question 40

Dideda Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 360,000 \\\hline \text { Selling and administrative expenses } & \underline { 240,000 } \\\hline \text { Total } & \$ 600,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} & 25 \% & 65 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 60 \% & 20 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.



-How much cost,in total,would be allocated in the first-stage allocation to the Customer Support activity cost pool?

A) $120,000.
B) $255,000.
C) $282,000.
D) $390,000.

Question 41

Abel Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 200 units and of Product B is 400 units. There are three activity cost pools, with estimated costs and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$$\begin{array}{|l|r|r|r|r|}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 16,660 & 600 & 100 & 700 \\\hline \text { Activity 2 } & 18,450 & 1,100 & 700 & 1,800 \\\hline \text { Activity 3 } & 9,731 & 60 & 160 & 220 \\\hline\end{array}$


-The cost per unit of Product A is closest to which of the following?

A) $27.91.
B) $56.38.
C) $141.04.
D) $70.52.

Question 42

-To the nearest whole dollar,how much wages and salaries cost would be allocated to a customer who placed eight orders in a year?

A) $7,474.
B) $9,191.
C) $10,908.
D) $14,948.

Question 43

Acton Company has two products: A and B. The annual production and sales of Product A is 800 units and of Product B is 500 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.2 direct labour hours per unit. The total estimated overhead for next period is $92,023.

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows:
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)


-The overhead cost per unit of Product A under the activity-based costing system is closest to which of the following?

A) $11.24.
B) $70.79.
C) $81.20.
D) $86.97.

Question 44

-To the nearest whole dollar,how much wages and salaries cost would be allocated to a customer who placed four orders in a year? Do not round intermediate calculations.

A) $7,124.
B) $8,859.
C) $10,595.
D) $14,248.

Question 45

Acton Company has two products: A and B. The annual production and sales of Product A is 800 units and of Product B is 500 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.2 direct labour hours per unit. The total estimated overhead for next period is $92,023.

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows:
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)


-The predetermined overhead rate under the traditional costing system is closest to which of the following?

A) $13.17.
B) $21.60.
C) $37.46.
D) $270.66.

Question 46

Addy Company has two products: A and B. The annual production and sales of Product A is 1,700 units and of Product B is 1,100 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.6 direct labour hours per unit. The total estimated overhead for next period is $98,785.

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for externalreports. The new activity-based costing system would have three factory overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows:

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array}{|l|r|r|r|r|r}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \begin{array}{r}\text { Estimated } \\\text { Overhead Cost }\end{array} & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,528 & 1,000 & 600 & 1,600 \\\hline \text { Activity 2 } & 17,385 & 1,700 & 200 & 1,900 \\\hline \text { General Factory } & \underline{50,872} & 510 & 660 & 1,170 \\\hline \text { Total } & \$ 98,785 & & &\\\hline\end{array}$

(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)

- The predetermined overhead rate (i.e.,activity rate)for Activity 2 under the activity-based costing system is closest to which of the following?

A) $9.15.
B) $10.23.
C) $51.99.
D) $86.93.

Question 47

-What would be the total overhead cost per customer according to the activity-based costing system,rounded to the nearest whole dollar? In other words,what would be the overall activity rate for the Customer Support activity cost pool?

A) $11,100.
B) $12,950.
C) $13,800.
D) $14,800.

Question 48

Abel Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 200 units and of Product B is 400 units. There are three activity cost pools, with estimated costs and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$$\begin{array}{|l|r|r|r|r|}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 16,660 & 600 & 100 & 700 \\\hline \text { Activity 2 } & 18,450 & 1,100 & 700 & 1,800 \\\hline \text { Activity 3 } & 9,731 & 60 & 160 & 220 \\\hline\end{array}$


-The cost per unit of Product B is closest to which of the following?

A) $17.69.
B) $41.58.
C) $74.73.
D) $81.53.

Question 49

Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. The direct production costs (material and labour) for Product A are $110,600 and for B is $70,000. There are three activity cost pools for overhead, with estimated costs and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array}{|l|r|r|r|r|}\hline\begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 18,270 & 600 & 500 & 1,100 \\\hline \text { Activity 2 } & 35,891 & 1,600 & 300 & 1,900 \\\hline \text { Activity 3 } & 48,796 & 440 & 420 & 860 \\\hline\end{array}$


-The activity rate for Activity 3 is closest to which of the following?

A) $26.67.
B) $56.74.
C) $116.18.
D) $119.72.

Question 50

Acton Company has two products: A and B. The annual production and sales of Product A is 800 units and of Product B is 500 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.2 direct labour hours per unit. The total estimated overhead for next period is $92,023.

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows:
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)


-The predetermined overhead rate (i.e.,activity rate)for Activity 1 under the activity-based costing system is closest to which of the following?

A) $13.17.
B) $24.15.
C) $28.97.
D) $83.66.

Question 51

Addy Company has two products: A and B. The annual production and sales of Product A is 1,700 units and of Product B is 1,100 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.6 direct labour hours per unit. The total estimated overhead for next period is $98,785.

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for externalreports. The new activity-based costing system would have three factory overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows:

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array}{|l|r|r|r|r|r}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \begin{array}{r}\text { Estimated } \\\text { Overhead Cost }\end{array} & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,528 & 1,000 & 600 & 1,600 \\\hline \text { Activity 2 } & 17,385 & 1,700 & 200 & 1,900 \\\hline \text { General Factory } & \underline{50,872} & 510 & 660 & 1,170 \\\hline \text { Total } & \$ 98,785 & & &\\\hline\end{array}$

(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)

-The overhead cost per unit of Product B under the traditional costing system is closest to which of the following?

A) $5.49.
B) $11.45.
C) $26.09.
D) $50.66.

Question 52

Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. The direct production costs (material and labour) for Product A are $110,600 and for B is $70,000. There are three activity cost pools for overhead, with estimated costs and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array}{|l|r|r|r|r|}\hline\begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 18,270 & 600 & 500 & 1,100 \\\hline \text { Activity 2 } & 35,891 & 1,600 & 300 & 1,900 \\\hline \text { Activity 3 } & 48,796 & 440 & 420 & 860 \\\hline\end{array}$


-The overhead cost per unit of Product A is closest to which of the following?

A) $22.70.
B) $47.89.
C) $57.20.
D) $59.23.

Question 53

Addy Company has two products: A and B. The annual production and sales of Product A is 1,700 units and of Product B is 1,100 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.6 direct labour hours per unit. The total estimated overhead for next period is $98,785.

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for externalreports. The new activity-based costing system would have three factory overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows:

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array}{|l|r|r|r|r|r}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \begin{array}{r}\text { Estimated } \\\text { Overhead Cost }\end{array} & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,528 & 1,000 & 600 & 1,600 \\\hline \text { Activity 2 } & 17,385 & 1,700 & 200 & 1,900 \\\hline \text { General Factory } & \underline{50,872} & 510 & 660 & 1,170 \\\hline \text { Total } & \$ 98,785 & & &\\\hline\end{array}$

(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)

-The overhead cost per unit of Product B under the activity-based costing system is closest to which of the following?

A) $26.09.
B) $35.28.
C) $38.16.
D) $50.66.

Question 54

Arthur Company has two products: $\mathrm{S}$ and $\mathrm{D}$ . The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:

$\begin{array}{|l|r|r|r|r|}\hline\begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product S } & \text { Product D } & \text { Total } \\\hline \text { Activity 1 } & \$ 20,000 & 100 & 400 & 500 \\\hline \text { Activity 2 } & 14,600 & 500 & 250 & 750 \\\hline \text { Activity 3 } & 90,000 & 300 & 2,700 & 3,000\\\hline\end{array}$

The annual production and sales of Product $\mathrm{S}$ is 4,547 units. The annual production and sales of Product $D$ is 7,913. Direct costs/unit for each product are as follows:

$\begin{array}{l|r|r|}\hline & \text { Product S } & \text { Product D } \\\hline \text { Direct Material } & \$ 1.50 & \$ 1.20 \\\hline \text { Direct Labour } & \$ 2.00 & \$ 2.50 \\\hline\end{array}$


-The activity rate under the activity-based costing system for Activity 3 is closest to which of the following?

A) $29.32.
B) $30.00.
C) $33.33.
D) $41.53.

Question 55

Acton Company has two products: A and B. The annual production and sales of Product A is 800 units and of Product B is 500 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.2 direct labour hours per unit. The total estimated overhead for next period is $92,023.

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows:
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)


-The overhead cost per unit of Product B under the traditional costing system is closest to which of the following?

A) $2.63.
B) $4.32.
C) $7.49.
D) $54.13.

Question 56

Arthur Company has two products: $\mathrm{S}$ and $\mathrm{D}$ . The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:

$\begin{array}{|l|r|r|r|r|}\hline\begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product S } & \text { Product D } & \text { Total } \\\hline \text { Activity 1 } & \$ 20,000 & 100 & 400 & 500 \\\hline \text { Activity 2 } & 14,600 & 500 & 250 & 750 \\\hline \text { Activity 3 } & 90,000 & 300 & 2,700 & 3,000\\\hline\end{array}$

The annual production and sales of Product $\mathrm{S}$ is 4,547 units. The annual production and sales of Product $D$ is 7,913. Direct costs/unit for each product are as follows:

$\begin{array}{l|r|r|}\hline & \text { Product S } & \text { Product D } \\\hline \text { Direct Material } & \$ 1.50 & \$ 1.20 \\\hline \text { Direct Labour } & \$ 2.00 & \$ 2.50 \\\hline\end{array}$


-The overhead cost per unit of Product S under activity-based costing is closest to which of the following? Do not round intermediate calculations.

A) $1.83.
B) $1.98.
C) $5.00.
D) $10.00.

Question 57

Abel Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 200 units and of Product B is 400 units. There are three activity cost pools, with estimated costs and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$$\begin{array}{|l|r|r|r|r|}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 16,660 & 600 & 100 & 700 \\\hline \text { Activity 2 } & 18,450 & 1,100 & 700 & 1,800 \\\hline \text { Activity 3 } & 9,731 & 60 & 160 & 220 \\\hline\end{array}$


-The predetermined overhead rate (i.e.,activity rate)for Activity 2 under the activity-based costing system is closest to which of the following?

A) $10.25.
B) $16.77.
C) $24.91.
D) $26.36.

Question 58

-What would be the total overhead cost per order according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Filling Orders activity cost pool?

A) $18.50.
B) $23.50.
C) $27.75.
D) $37.00.

Question 59

Addy Company has two products: A and B. The annual production and sales of Product A is 1,700 units and of Product B is 1,100 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.6 direct labour hours per unit. The total estimated overhead for next period is $98,785.

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for externalreports. The new activity-based costing system would have three factory overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows:

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array}{|l|r|r|r|r|r}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \begin{array}{r}\text { Estimated } \\\text { Overhead Cost }\end{array} & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,528 & 1,000 & 600 & 1,600 \\\hline \text { Activity 2 } & 17,385 & 1,700 & 200 & 1,900 \\\hline \text { General Factory } & \underline{50,872} & 510 & 660 & 1,170 \\\hline \text { Total } & \$ 98,785 & & &\\\hline\end{array}$

(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)

-The predetermined overhead rate under the traditional costing system is closest to which of the following?

A) $9.15.
B) $19.08.
C) $43.48.
D) $84.43.

Question 60

Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. The direct production costs (material and labour) for Product A are $110,600 and for B is $70,000. There are three activity cost pools for overhead, with estimated costs and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array}{|l|r|r|r|r|}\hline\begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 18,270 & 600 & 500 & 1,100 \\\hline \text { Activity 2 } & 35,891 & 1,600 & 300 & 1,900 \\\hline \text { Activity 3 } & 48,796 & 440 & 420 & 860 \\\hline\end{array}$


-The total annual production cost for Product B is closest to which of the following?

A) $37,816.
B) $107,802.
C) $65,231.
D) $70,000.

Question 61

Grodt Catering uses activity-based costing for its overhead costs. The company has provided the following data concerning the activity rates in its activity-based costing system:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array} { | l | r | r | } \hline & \text { Preparing Meals } & \text { Arranging Functions } \\\hline \text { Wages } & \$ 0.85 & \$ 110.00 \\\hline \text { Supplies } & \$ 0.50 & \$ 310.00 \\\hline \text { Other expenses } & \$ 0.30 & \$ 120.00 \\\hline\end{array}$ The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool.

Management would like to know whether the company made any money on a recent function at which 60 meals were served. The company catered the function for a fixed price of $19.00 per meal. The cost of the raw ingredients for the meals was $8.60 per meal. This cost is in addition to the costs of wages, supplies, and other expenses detailed above.




-According to the activity-based costing system,what is the total profit margin for this function?

A) ($165).
B) ($115).
C) ($15).
D) $135.

Question 62

-What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?

A) $0.90.
B) $1.05.
C) $1.10.
D) $1.20.

Question 63

Addison Company has two products: A and B. Annual production and sales are 800 units of Product A and 700 units of Product B. The company has traditionally used direct labour-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.2 direct labour hours per unit and Product B requires 0.6 direct labour hours per unit. The total estimated overhead for next period is $71,286.
The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for externalreports. The new activity-based costing system would have three factory overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array}{|l|r|r|r|r|}\hline\begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \begin{array}{r}\text { Estimated } \\\text { Overhead Cost }\end{array} & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 20,272 & 300 & 500 & 800 \\\hline \text { Activity 2 } & 29,380 & 800 & 500 & 1,300 \\\hline \text { General Factory } & \underline{21,634} & 160 & 420 & 580 \\\hline \text { Total } & \$ 71,286 & & &\\\hline\end{array}$

(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)



-(Appendix 7A)The predetermined overhead rate under the traditional costing system is closest to:

A) $89.11
B) $101.84
C) $47.52
D) $122.91

Question 64

Sarah Company has two products: T and V. The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product T } & \text { Product V } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 39,000 & 400 & 900 & 1,300 \\\hline \text { Activity 3 } & 80,000 & 400 & 3,600 & 4,000 \\\hline\end{array}$ The annual production and sales of Product T is 10,640 units. The annual production and sales of Product V is 26,600.



-The overhead cost per unit of Product T under activity-based costing is closest to which of the following?

A) $4.00.
B) $28.66.
C) $2.81
D) $10.04.

Question 65

-What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?

A) $2.48.
B) $2.75.
C) $2.83.
D) $3.03.

Question 66

Monson Company has two products: G and P. The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l r r r } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product G } & \text { Product P } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 24,000 & 600 & 900 & 1,500 \\\hline \text { Activity 3 } & 80,000 & 400 & 3,600 & 4,000 \\\hline\end{array}$ The annual production and sales of Product G is 10,640 units. The annual production and sales of Product P is 26,600.



-The overhead cost per unit of Product G under activity-based costing is closest to which of the following?

A) $4.00.
B) $28.66.
C) $2.59.
D) $10.04.

Question 67

Groce Catering uses activity-based costing for its overhead costs. The company has provided the following data concerning the activity rates in its activity-based costing system:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array} { | l | r | r | } \hline & \text { Preparing Meals } & \text { Arranging Functions } \\\hline \text { Wages } & \$ 0.70 & \$ 145.00 \\\hline \text { Supplies } & \$ 0.45 & \$ 230.00 \\\hline \text { Other expenses } & \$ 0.40 & \$ 100.00 \\\hline\end{array}$
The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool.

Management would like to know whether the company made any money on a recent function at which 150 meals were served. The company catered the function for a fixed price of $14.00 per meal. The cost of the raw ingredients for the meals was $8.75 per meal. This cost is in addition to the costs of wages, supplies, and other expenses detailed above.



-According to the activity-based costing system,what is the total profit margin for this function?

A) ($70).
B) ($20).
C) $80.
D) $230.

Question 68

Grodt Catering uses activity-based costing for its overhead costs. The company has provided the following data concerning the activity rates in its activity-based costing system:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array} { | l | r | r | } \hline & \text { Preparing Meals } & \text { Arranging Functions } \\\hline \text { Wages } & \$ 0.85 & \$ 110.00 \\\hline \text { Supplies } & \$ 0.50 & \$ 310.00 \\\hline \text { Other expenses } & \$ 0.30 & \$ 120.00 \\\hline\end{array}$ The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool.

Management would like to know whether the company made any money on a recent function at which 60 meals were served. The company catered the function for a fixed price of $19.00 per meal. The cost of the raw ingredients for the meals was $8.60 per meal. This cost is in addition to the costs of wages, supplies, and other expenses detailed above.




-According to the activity-based costing system,what was the total cost (including the costs of raw ingredients)of the function mentioned above,rounded to the nearest whole dollar?

A) $505.
B) $655.
C) $1,155.
D) $1,355.

Question 69

Grogam Catering uses activity-based costing for its overhead costs. The company has provided the following data concerning the activity rates in its activity-based costing system: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array}{|l|r|r|} \hline& \text { Preparing Meals } & \text { Arranging Functions } \\\hline \text { Wages } & \$ 1.15 & \$ 110.00 \\\hline \text { Supplies } & \$ 0.35 & \$ 380.00 \\\hline \text { Other expenses } & \$ 0.25 & \$ 70.00\\\hline \end{array}$
The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool.

Management would like to know whether the company made any money on a recent function at which 100 meals were served. The company catered the function for a fixed price of $21.00 per meal. The cost of the raw ingredients for the meals was $8.25 per meal. This cost is in addition to the costs of wages, supplies, and other expenses detailed above.


-According to the activity-based costing system,what is the total profit margin for this function?

A) $1,365.
B) $540.
C) $1,040.
D) $1,190.

Question 70

Monson Company has two products: G and P. The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l r r r } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product G } & \text { Product P } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 24,000 & 600 & 900 & 1,500 \\\hline \text { Activity 3 } & 80,000 & 400 & 3,600 & 4,000 \\\hline\end{array}$ The annual production and sales of Product G is 10,640 units. The annual production and sales of Product P is 26,600.



-The overhead cost per unit of Product P under activity-based costing is closest to which of the following?

A) $4.00.
B) $6.88.
C) $10.00.
D) $30.16.

Question 71

Groce Catering uses activity-based costing for its overhead costs. The company has provided the following data concerning the activity rates in its activity-based costing system:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array} { | l | r | r | } \hline & \text { Preparing Meals } & \text { Arranging Functions } \\\hline \text { Wages } & \$ 0.70 & \$ 145.00 \\\hline \text { Supplies } & \$ 0.45 & \$ 230.00 \\\hline \text { Other expenses } & \$ 0.40 & \$ 100.00 \\\hline\end{array}$
The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool.

Management would like to know whether the company made any money on a recent function at which 150 meals were served. The company catered the function for a fixed price of $14.00 per meal. The cost of the raw ingredients for the meals was $8.75 per meal. This cost is in addition to the costs of wages, supplies, and other expenses detailed above.



-According to the activity-based costing system,what was the total cost (including the costs of raw ingredients)of the function mentioned above,rounded to the nearest whole dollar?

A) $1,370.
B) $1,520.
C) $2,020.
D) $2,220.

Question 72

Sarah Company has two products: T and V. The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product T } & \text { Product V } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 39,000 & 400 & 900 & 1,300 \\\hline \text { Activity 3 } & 80,000 & 400 & 3,600 & 4,000 \\\hline\end{array}$ The annual production and sales of Product T is 10,640 units. The annual production and sales of Product V is 26,600.



-The activity rate under the activity-based costing system for Activity 2 is closest to which of the following?

A) $16.00.
B) $21.97.
C) $26.67.
D) $30.00.

Question 73

Arthur Company has two products: $\mathrm{S}$ and $\mathrm{D}$ . The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:

$\begin{array}{|l|r|r|r|r|}\hline\begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product S } & \text { Product D } & \text { Total } \\\hline \text { Activity 1 } & \$ 20,000 & 100 & 400 & 500 \\\hline \text { Activity 2 } & 14,600 & 500 & 250 & 750 \\\hline \text { Activity 3 } & 90,000 & 300 & 2,700 & 3,000\\\hline\end{array}$

The annual production and sales of Product $\mathrm{S}$ is 4,547 units. The annual production and sales of Product $D$ is 7,913. Direct costs/unit for each product are as follows:

$\begin{array}{l|r|r|}\hline & \text { Product S } & \text { Product D } \\\hline \text { Direct Material } & \$ 1.50 & \$ 1.20 \\\hline \text { Direct Labour } & \$ 2.00 & \$ 2.50 \\\hline\end{array}$


-The total production cost per unit of Product D under activity-based costing is closest to which of the following?

A) $16.15.
B) $12.87.
C) $16.37.
D) $16.57.

Question 74

Foster Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity-based costing system:

$\begin{array}{|l|r|}\hline \text { Overhead costs: } & \\\hline \text { Wages and salaries } & \$ 70,000 \\\hline \text { Other expenses } & \underline{50,000} \\\hline \text { Total } & \$ 120,000\\\hline \end{array}$

$\text { Distribution of Resource Consumption: }$

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array}{|l|r|r|r|} \hline& \text { Making Bouquets } & \text { Delivery } & \text { Other } \\\hline \text { Wages and salaries } & 70 \% & 20 \% & 10 \% \\\hline \text { Other expenses } & 45 \% & 25 \% & 30 \% \\\hline\end{array}$
The "Other" activity cost pool consists of the costs of idle capacity and organizationsustaining costs. The amount of activity for the year is as follows:


$\begin{array}{|l|r|}\hline \text { Activity Cost Pool } & \text { Activity } \\\hline \text { Making bouquets } & 40,000 \text { bouquets } \\\hline \text { Delivery } & 1,000 \text { delive }\\\hline\end{array}$

-What would be the total overhead cost per delivery according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Deliveries activity cost pool?

A) $24.00.
B) $26.50.
C) $27.00.
D) $30.00.

Question 75

Sarah Company has two products: T and V. The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product T } & \text { Product V } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 39,000 & 400 & 900 & 1,300 \\\hline \text { Activity 3 } & 80,000 & 400 & 3,600 & 4,000 \\\hline\end{array}$ The annual production and sales of Product T is 10,640 units. The annual production and sales of Product V is 26,600.



-The overhead cost per unit of Product V under activity-based costing is closest to which of the following?

A) $4.50.
B) $6.88.
C) $10.00.
D) $30.16.

Question 76

Monson Company has two products: G and P. The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l r r r } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product G } & \text { Product P } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 24,000 & 600 & 900 & 1,500 \\\hline \text { Activity 3 } & 80,000 & 400 & 3,600 & 4,000 \\\hline\end{array}$ The annual production and sales of Product G is 10,640 units. The annual production and sales of Product P is 26,600.



-The activity rate under the activity-based costing system for Activity 2 is closest to which of the following?

A) $16.00.
B) $21.97.
C) $26.67.
D) $89.33.

Question 77

-What would be the total overhead cost per delivery according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Deliveries activity cost pool?

A) $3.93.
B) $4.71.
C) $4.93.
D) $5.50.

Question 78

Grogam Catering uses activity-based costing for its overhead costs. The company has provided the following data concerning the activity rates in its activity-based costing system: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array}{|l|r|r|} \hline& \text { Preparing Meals } & \text { Arranging Functions } \\\hline \text { Wages } & \$ 1.15 & \$ 110.00 \\\hline \text { Supplies } & \$ 0.35 & \$ 380.00 \\\hline \text { Other expenses } & \$ 0.25 & \$ 70.00\\\hline \end{array}$
The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool.

Management would like to know whether the company made any money on a recent function at which 100 meals were served. The company catered the function for a fixed price of $21.00 per meal. The cost of the raw ingredients for the meals was $8.25 per meal. This cost is in addition to the costs of wages, supplies, and other expenses detailed above.


-According to the activity-based costing system,what was the total cost (including the costs of raw ingredients)of the function mentioned above,rounded to the nearest whole dollar?

A) $910.
B) $1,060.
C) $1,560.
D) $1,760.

Question 79

-What would be the total overhead cost per delivery according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Deliveries activity cost pool?

A) $6.00
B) $6.60
C) $6.80
D) $7.20

Question 80

Foster Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity-based costing system:

$\begin{array}{|l|r|}\hline \text { Overhead costs: } & \\\hline \text { Wages and salaries } & \$ 70,000 \\\hline \text { Other expenses } & \underline{50,000} \\\hline \text { Total } & \$ 120,000\\\hline \end{array}$

$\text { Distribution of Resource Consumption: }$

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array}{|l|r|r|r|} \hline& \text { Making Bouquets } & \text { Delivery } & \text { Other } \\\hline \text { Wages and salaries } & 70 \% & 20 \% & 10 \% \\\hline \text { Other expenses } & 45 \% & 25 \% & 30 \% \\\hline\end{array}$
The "Other" activity cost pool consists of the costs of idle capacity and organizationsustaining costs. The amount of activity for the year is as follows:


$\begin{array}{|l|r|}\hline \text { Activity Cost Pool } & \text { Activity } \\\hline \text { Making bouquets } & 40,000 \text { bouquets } \\\hline \text { Delivery } & 1,000 \text { delive }\\\hline\end{array}$

-What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?

A) $1.35.
B) $1.73.
C) $1.79.
D) $2.10.