Hochberg Corporation uses an activity-based costing system with the following three

activity cost pools:

Activity Cost Pool Total Activity

Fabrication ............................ 30,000 machine-hours

Order processing ................... 300 orders

Other ..................................... Not applicable

The Other activity cost pool is used to accumulate costs of idle capacity and

organization-sustaining costs.

The company has provided the following data concerning its costs:

Wages and salaries ................. $340,000

Depreciation ........................... 160,000

Occupancy .............................. 220,000

Total ........................................ $720,000

The distribution of resource consumption across activity cost pools is given below:

Activity Cost Pools

Fabrication

Order

Processing Other Total

Wages and salaries .................. 30% 60% 10% 100%

Depreciation ............................ 15% 50% 35% 100%

Occupancy ............................... 15% 55% 30% 100%

The activity rate for the Fabrication activity cost pool is closest to:

A) $5.30 per machine-hour

B) $3.60 per machine-hour

C) $7.20 per machine-hour

D) $4.80 per machine-hour