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aev [14]
3 years ago
15

Millner Corporation has provided the following data from its activity-based costing accounting system: Activity Cost Pool Total

Cost Total Activity Designing products $ 1,372,448 7,798 product design hours Setting up batches $ 33,300 740 batch set-ups Assembling products $ 126,160 6,640 assembly hours The activity rate for the "designing products" activity cost pool is closest to:
Business
1 answer:
ryzh [129]3 years ago
4 0

Answer:

Activity rate = $176  per hour

Explanation:

<em>Activity-based costing is a form of absorption costing where overheads are charged to product using cost drivers.  </em>

<em>Under this method, overheads are first analyzed and categorized by the activities responsible for them and then charged to product based on the amount of benefits enjoyed using cost drivers.  </em>

<em>Activity rate per driver is calculated as:  </em>

Activity overhead for the period / Total cost drivers for the period   Designing products activity cost pool= designing cost /product design hours

        = $1372,448/7,798 hours

       = $176  per hour

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