Question

Vanvalkenburg, Inc., manufactures and sells two products: Product Q5 and Product J0. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Activity Overhead Expected Activity Activity Cost Pools Measures Cost Product o5 Product JO TotalLabor-related DLHs $191,748 3, 000 2,800 5, 800 Production orders Order 70,536 300 500 800Order size MHs 295, 592 4,300 4,500 8,800 $557,876 The activity rate for the Production Orders activity cost pool under activity-based costing is closest to:_____.a. $63.40 per order b. $68.74 per order c. $88 17 per order d. $65.69 per order

Answer 1

Answer:

c.  $88.17 per order

Explanation:

The computation of the activity rate for the production order is shown below:

Activity rate = Production orders ÷ order size

where,

The Production order is $70,536

And, the order size is 800

Now placing these values to the above formula

So, the activity rate is

= $70,536 ÷ 800 order size

= $88.17 per order

We simply applied the above formula so that the activity rate could come