Orzel Corporation has provided the following data concerning its overhead costs for the coming year:
|
Wages and salaries |
$240,000 |
|
Depreciation |
120,000 |
|
Occupancy |
180,000 |
|
Total |
$540,000 |
The company has an activity based costing system with the following three activity cost pools and estimated activity for the coming year:
|
Activity Cost Pool |
Total Activity |
|
Assembly |
10,000 labor hours |
|
Order processing |
500 orders |
|
Other |
Not applicable |
The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization sustaining costs.
The distribution of resource consumption across activity cost pools is given below:
|
|
Activity Cost Pools |
|||
|
|
Assembly |
Order Processing |
Other |
Total |
|
Wages and salaries |
30% |
50% |
20% |
100% |
|
Depreciation |
15% |
35% |
50% |
100% |
|
Occupancy |
5% |
65% |
30% |
100% |
The activity rate for the Assembly activity cost pool is closest to:
A) $2.70 per labor hour
B) $9.00 per labor hour
C) $9.90 per labor hour
D) $16.20 per labor hour