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Wrap Corporation is a job-order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year:
Wrap Corporation is a job-order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year:
Activity | Cost | Driver | Amount of Driver |
Setups | $220,000 | Number of setups | 8,000 |
Purchasing | 210,000 | Number of parts | 30,000 |
Other overhead | 260,000 | Direct labor hours | 80,000 |
The following information about the jobs was given for August:
Job 201 | Job 202 | Job 203 | Job 204 | |
Balance 8/1 | $64,500 | $40,250 | $31,400 | $ 0 |
Direct materials | $64,000 | $32,300 | $21,000 | $16,000 |
Direct labor | $82,000 | $39,600 | $45,000 | $25,000 |
Number of setups | 30 | 15 | 40 | 190 |
Number of parts | 200 | 70 | 500 | 400 |
Direct labor hours | 4,000 | 2,300 | 5,000 | 1,600 |
By August 31, Jobs 202 and 203 were completed and sold. The remaining jobs were still in process. What is the activity rate for purchasing?
a.$9
b.$5
c.$7
d.$6
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