Laningham Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs-equipment depreciation and supervisory expense-are allocated to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below:

Overhead Costs
Equipment Depreciation	$60,000
Supervisory Expense	$7.000

Distribution of Resource Consumption Across Activity Pools

	Activity Cost Pools
	Machining	Order Filling	Other
Equipment Depreciation	60%	20%	20%
Supervisory Expense	30%	30%	40%

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:

Activity	Machining	Order Filling
Product H4	8,500	200
Product O1	1,500	800
Total	10,000	1,000

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

Multiple Choice

• $3.81 per MH

• $10.50 per MH

• $3.60 per MH

• $6.70 per MH