A company has an activity-based costing system with three ac…
A company has an activity-based costing system with three activity cost pools–Machining, Order Filling, and Other. 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$ 86,200Supervisory expense$ 8,200Distribution of resource consumption across activity cost pools: Activity Cost PoolsMachiningOrder FillingOtherEquipment depreciation0.600.200.20Supervisory expense0.600.100.30Machining 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: MHs (Machining)Orders (Order Filling)Product J21,950680Product K59,6701,850Total11,6202,530The activity rate for the Order Filling activity cost pool under activity-based costing is closest to: