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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

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 labor-related expenses?

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