Answer:
The activity rate for the machine setup cost pool is $160.00
Explanation:
The activity rate for machine setup cost pool is computed as :
machine setup costs/number of setups
Machine set up costs is $41600
Number of setups is 260 setups
Activity rate for machine setup=$41600/260
=$160.00
The activity rate for machine setup is $160 per setup
Activity rate shows how much per activity is allocated to product under activity based.
Determining activity rate is the of one steps to be taken in Activity Based Costing and Activity Based Management
The other steps include:
Identification of activity incurring costs
Assigning costs to activity
Assignment of costs to cost objects and so on.
