Question

Which of the following would be an acceptable measure of activity for a material handling activity cost pool? Options Number of material moves Weight of material moved A Yes Yes B No Yes C Yes No D No No

Answer 1

Answer:

An acceptable measure of activity for a material handling activity cost pool:

Options Number of material moves Weight of material moved

A Yes Yes

Explanation:

The material handling activity cost pool could use any of the two criteria to  measure the activity cost.  It all depends on the materials involved.  Some materials tither toward their number more than the weight, while others tither toward their weight more than the number.  So, if more overhead cost is incurred as a result of the weight, then the weight should be part of the criteria.  If the number of materials handled determines the overhead cost, then it should be the basis for the measurement and allocation of overhead.  This ensures fairness, correct accounting, and appropriate pricing of the products.