Appleby Manufacturing uses an activity-based costing system. The company produces Model F and Model G.

Information relating to the two products is as follows :

Model F Model G

Units produced 24,000 30,000

Machine hours 7,500 8,500

Direct labor hours 8,000 12,000

Material handling (number of moves) 4,000 6,000

Setups 5,000 7,000

Purchase orders 30 40

Inspections 10,000 14,000

Product line variations 8 12

The following overhead costs are reported for the following activities of the production process:

Material handling $ 40,000

Labor-related overhead 120,000

Setups 60,000

Product design 100,000

Batch inspections 120,000

Central purchasing 70,000
Appleby Manufacturing has used activity-based costing to assign costs to Models F and G as given in the table below:

Activity Cost Pool Driver Pool Rate Model F Activity Model F Cost Model G Activity Model G Cost

Total Material handling $40,000 10,000 $4 4,000 $16,000 6,000 $24,000 $40,000

Labor related overhead $120,000 20,000 $6 8,000 $48,000 12,000 $72,000 $120,000 Setups $60,000 12,000 $5 5,000 $25,000 7,000 $35,000 $60,000

Product design $100,000 20 $5,000 8 $40,000 12 $60,000 $100,000

Batch inspections $120,000 24,000 $5 10,000 $50,000 14,000 $70,000 $120,000

Central purchasing $70,000 70 $1,000 30 $30,000 40 $40,000 $70,000

Total $209,000 $301,000 $510,000

Appleby Manufacturing wants to implement an approximately relevant ABC system by using the two most expensive activities for cost assignment.

Under this new approach, what is the new pool rate for batch inspection costs? 

a.$10.625 

b.$15.525 

c.$ d.$5