Question

The Beckham Company has the following information about their activity cost pools: Activity Cost Pools Total Overhead Cost Total Activity Machine Setups $ 125,000 5,000 setups Customer Orders $ 200,000 1,250 orders Product Design $ 300,000 2,500 product design hours The activity rate for machine setups is ________. multiple choice $125,000 $0.04 per setup $10 per setup $25 per setup

Answer 1

Answer:

$25 per setup

Explanation:

With regards to the above, activity rate is computed as;

= Activity cost pool resources / Activity driver

Activity cost pool resources = $125,000

Activity driver = 5,000

Activity rate for machine setup = $125,000/5,000 = $25 per setup