McCaskey Corporation uses an activity-based costing system with the following three activity cost pools:

Activity Cost Pool Total Activity

Fabrication --------------- 40,000 machine hours

Order processing -------- 500 order

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 -------- $420,000

Depreciation --------------- 100,000

Occupancy ------------------ 120,000

Total -------------------------- $640,000

The distribution of resource consumption across activity cost pools is given below:

Activity Cost Pools

Fabrication Order Processing Other Total

Wages and salaries 5% 80% 15% 100%

Depreciation 15% 45% 40% 100%

Occupancy 25% 50% 25% 100%

The activity rate for the Fabrication activity cost pool is closest to:

	a.	$1.65 per machine-hour
	b.	$4.00 per machine-hour
	c.	$0.80 per machine-hour
	d.	$2.40 per machine-hour