Keystone Corporation has estimated activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to five separate activity pools. The budgeted activity cost and activity base data by product are provided below.

		Activity Cost		Activity Base
Procurement		$ 370,000		Number of purchase orders
Scheduling		250,000		Number of production orders
Materials handling		500,000		Number of moves
Product development		730,000		Number of engineering changes
Production		1,500,000		Machine hours
	Number of Purchase Orders	Number of Production Orders	Number of Moves	Number of Engineering Changes	Machine Hours	Number of Units
Disk drives	4,000	300	1,400	10	2,000	2,000
Tape drives	4,000	150	800	10	8,000	4,000
Wire drives	12,000	800	4,000	25	10,000	2,500

Total 20,000 1,250 6,200 45 20,000

The activity rate for the procurement activity cost pool is:

a.

$43.53 per purchase order

b.

$18.50 per purchase order

c.

$37.00 per purchase order

d.

$15.42 per purchase order

Clear my choice

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