Canada Corporation manufactures two sizes of calculators, regular and jumbo. The following information applies to their expectations for the following period:

Cost Pool

Overhead Costs

Cost driver

Material handling

Machine maintenance

Setups

Inspections

$22,500

$150,000

$135,000

$69,875

45,000 Orders

7,500 Maintenance-hours

22,750 Setups

10,750 Inspections

Total overhead costs

$377,375

Production estimations:

Production Units:

Regular

Jumbo

Maintenance-hours

Direct labour-hours

8,000,000 units

16,000,000

200,000 maintenance hours

400,000 direct labour-hours

Expected direct costs amounts to $480,000 for the period. Support cost requirements of both products are substantially different from one another. Canada Corporation uses an ABC costing system.

The setups activity-cost driver rate is ________.

Select one:

a. $6.50 per setup

b. $5.24 per setup

c.

Not one of the options

d. $5.75 per setup

e.

$5.93 per setup