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Rollergirl produces old-fashioned style roller skates and skateboards. The annual production and sales of roller skates is 900 units, while 1,760 skateboards are produced and
Rollergirl produces old-fashioned style roller skates and skateboards. The annual production and sales of roller skates is 900 units, while 1,760 skateboards are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Roller skates require 1.5 direct labor hours per unit, while skateboards require 3.25 direct labor hours per unit. The total estimated overhead for the period is $114,400. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools: Expected activity Activity cost pool Setup costs Engineering costs Maintenance costs Estimated overhead cost Roller skates $6,250 345 $17,000 490 $91,150 1,350 Skateboards Total 260 605 660 1,150 5,720 7,070 The cost pool activity rate for Engineering Costs would be closest to (Round all answers to two decimal places.) A. $12.89 per engineering hour. OB. $14.78 per engineering hour. C. $2.97 per engineering hour. D. $10.33 per engineering hour
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