Question
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
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 | 25% | 60% | 10% | 100% |
| Depreciation | 20% | 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. |
| ||
| D. |
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started