Question
McCaskey Corporation uses an activity-based costing system with the following three activity cost pools: Activity Cost Pool Total Activity Fabrication --------------- 4,000 machine hours Order
McCaskey Corporation uses an activity-based costing system with the following three activity cost pools: Activity Cost Pool Total Activity Fabrication --------------- 4,000 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 15% 50% 25% 100% The activity rate for the Fabrication activity cost pool is closest to:
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