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Provenzano Corporation manufactures two products: Product B56Z and Product D32N. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead
Provenzano Corporation manufactures two products: Product B56Z and Product D32N. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products B56Z and D32N.
| Activity Cost Pool | Activity Measure | Total Cost | Total Activity | |
|---|---|---|---|---|
| Machining | Machine-hours | $330,000 | 15,000 | MHs |
| Machine setups | Number of setups | $ 50,000 | 100 | setups |
| Product design | Number of products | $ 88,000 | 2 | products |
| Order size | Direct labor-hours | $280,000 | 10,000 | DLHs |
| Activity Measure | Product B56Z | Product D32N |
|---|---|---|
| Machine-hours | 6,000 | 9,000 |
| Number of setups | 80 | 20 |
| Number of products | 1 | 1 |
| Direct labor-hours | 6,000 | 4,000 |
What is the activity rate for the Machine Setups activity cost pool?
Multiple Choice
$625.00 per setup
$500.00 per setup
$3.33 per setup
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