1. Tatman Corporation uses an activity-based costing system with the following three activity cost pools:

Activity Cost Pool Total Activity

Fabrication ......................... 10,000 machine-hours

Order processing ............... 800 orders

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 ............ $320,000

Depreciation ...................... 220,000

Occupancy ......................... 120,000

Total .................................. $660,000

The distribution of resource consumption across activity cost pools is given below:

Activity Cost Pools

	Fabrication	Order Processing	Other	Total
Wages and salaries ......	20%	65%	15%	100%
Depreciation ................	15%	35%	50%	100%
Occupancy ...................	5%	70%	25%	100%

The activity rate for the Fabrication activity cost pool is closest to:

1. $3.30 per machine-hour
2. $13.20 per machine-hour
3. $10.30 per machine-hour
4. $8.80 per machine-hour