Question 3

GFT Corporation manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period:

Cost Pool Overhead Costs Activity-cost driver

Materials handling $46,000 94,000 orders

Machine maintenance $310,000 20,000 maintenance hours

Setups $261,000 45,000 setups

Inspections $132,370 21,700 inspections

Total support costs $749,370

Production Estimates

Production units:

Regular = 8,000,000 units

Jumbo = 16,000,000 units

Machine-hours = 500,000 mh

Labor-hours = 1,000,000 dlh

Expected direct costs amounts to $942,000 for the period. Support cost requirements of both products are substantially different from one another. Corporation uses an ABC costing system. What is the setups activity-cost driver rate?

Group of answer choices

$15.50/setup

$6.10/setup

$4.15/setup

$5.80/setup