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Miramar Industries manufactures two products: A and B. The manufacturing operation involves three overhead activities-production setup, material handling, and general factory activities. Miramar uses
Miramar Industries manufactures two products: A and B. The manufacturing operation involves three overhead activities-production setup, material handling, and general factory activities. Miramar uses activity-based costing to allocate overhead to products. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities: Activity Production setup Material handling General overhead Cost Activity Base $250,000 Number of setups 150,000 80,000 Number of parts Number of direct labor hours Each product's total activity in each of the three areas are as follows: Product A Product B 100 300 Number of setups Number of parts 40,000 20,000 Number of direct labor hours 8,000 12,000 What is the activity rate for material handling? Oa. $2.50 per par Ob. $3.75 per par Oc. $7.50 per pan Od. $1.50 per part
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