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Cars Inc. makes two types of cars, Basic and Deluxe, and reports the following data to be used in applying activity based costing. The company
Cars Inc. makes two types of cars, Basic and Deluxe, and reports the following data to be used in applying activity based costing. The company budgets production of 12,000 Basic cars and 4000 Deluxe cars Activity Cost Pool Activity Cost Driver Number of Setups Number of Parts Machine Hours Cost Assigned to Pool Basic Deluxe 400 Setups 20 Parts 40 parts per per unit unit 2 MH per 3 MH per unit Machine Setup 300,000.00 600 Setups Materials Handling Machine Depreciation (MH) 500,000.00 1,440,000.00 unit 2,240,000.00 Using the information above compute the overhead rate for machine setup activity cost pool using activity-based costing. O $500 per setup O $300 per setup O $750 per setup O $2,240 per setup
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