Hochberg Corporation uses an activity based costing system with the following three activity cost pools:
|
Activity Cost Pool |
Total Activity |
|
Fabrication |
30,000 machine hours |
|
Order processing |
300 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 |
$340,000 |
|
Depreciation |
160,000 |
|
Occupancy |
220,000 |
|
Total |
$720,000 |
The distribution of resource consumption across activity cost pools is given below:
|
|
Activity Cost Pools |
|||
|
|
Fabrication |
Order Processing |
Other |
Total |
|
Wages and salaries |
30% |
60% |
10% |
100% |
|
Depreciation |
15% |
50% |
35% |
100% |
|
Occupancy |
15% |
55% |
30% |
100% |
The activity rate for the Fabrication activity cost pool is closest to:
A) $5.30 per machine hour
B) $3.60 per machine hour
C) $7.20 per machine hour
D) $4.80 per machine hour