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Koutz Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools-Processing, Supervising, and Other.

Koutz Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools-Processing, Supervising, and Other. The costs in those activity cost pools appear below:

Processing

$36,100

Supervising

$10,400

Other

$47,500

Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:

MHs (Processing)

Batches (Supervising)

Product O7

8,900

800

Product G9

1,100

1,200

Total

10,000

2,000

Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.

Product O7

Product G9

Sales (total)

$265,100

$177,700

Direct materials (total)

$104,900

$94,400

Direct labor (total)

$113,800

$65,100

The activity rate for the Processing activity cost pool under activity-based costing is closest to:

$9.40 per MH

$0.63 per MH

$3.56 per MH

$3.61 per MH

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