For its inspecting cost pool, Ellsworth, Inc. expected overhead cost of $400,000 and 4,000 inspections. The actual overhead cost for that cost pool was $460,000 for 5,000 inspections. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is:

A. $80 per inspection

B. $100 per inspection

C. $115 per inspection

D. $92 per inspection

The correct answer is option B. $100 per inspection

Explanation:

Let's start by clarifying what Activity-based costing is.

This activity is one of the methods used in an organization in which its objective is to assign a cost to the activities used for the production of goods and services.

If we analyze the information we have, we know that the expected overhead cost is $ 400,000. If we divide this number by the inspections that are 4000, we will obtain the price per per inspection:

400000/4000 = 100.

Given this information we can say that the correct answer is option B.

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