Explain the concept of a pool rate in activity-based costing. Exhibit 5-6 ABC Data and Calculations for

Explain the concept of a pool rate in activity-based costing. 

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Exhibit 5-6 ABC Data and Calculations for the Machine-Related Cost Pool: Dronze Inc. Microsoft Excel DRONZE ABC CALCULATIONS 1. Compute pool rate for machine-related activity Machine Related Activity Activity cost pools Activity cost pool 2. Compute total activity cost for each product line 3. Compute product cost per unit for each product line Activity Cost Pool Cost drivers Cost Driver $1,242,000 Machine Hours Cost driver = quantity $1,242,000+230,000 = $5.40 STD DEL ULT Pool rate Product Pool line rate $5.40 STD DEL ULT Product line INFORMATION SUPPLIED BY ABC PROJECT TEAM Cost Driver Quantity X x 5.40 X 5.40 x Cost driver quantity for each product line; total in column G equals column D 230,000 Pool Rate 5.40 Product Line Cost driver quantity for each product line Activity cost for each product line $540,000 518,400 183,600 STD DEL ULY Total 100,000 96,000 34,000 + Cost Driver Quantity for Product Line H Activity Cost for Product Line 100,000 94,000 34,000 291.000 $1347000 0:43,000 654,400 103,000 $540,000 518,400 183,600 10,000 8,000 2,000 Activity cost for each product line Product line production volume Product line production volume Product Line Production Volume 10,000 8,000 2,000 Activity Cost per un of Product 54.00 6480 $1.00 Activity cost per unit of product $54.00 64.80 91.80