Question
Hochberg Corporation uses an activity-based costing system with the following three activity cost pools: Activity Cost Pool Total Activity Fabrication 40,000 machine-hours Order processing 500
Hochberg Corporation uses an activity-based costing system with the following three activity cost pools:
Activity Cost Pool | Total Activity | ||
Fabrication | 40,000 | machine-hours | |
Order processing | 500 | 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 | $ | 469,000 | |
Depreciation | 191,000 | ||
Occupancy | 120,000 | ||
Total | $ | 780,000 | |
|
The distribution of resource consumption across activity cost pools is given below:
Activity Cost Pools | ||||
Fabricating | Order Processing | Other | Total | |
Wages and salaries | 20% | 60% | 20% | 100% |
Depreciation | 20% | 25% | 55% | 100% |
Occupancy | 20% | 45% | 35% | 100% |
|
The activity rate for the Fabrication activity cost pool is closest to:
Noreen 4e Rechecks 2017-24-03
$3.90 per machine-hour
$4.88 per machine-hour
$0.65 per machine-hour
$2.25 per machine-hour
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