Daniele Corporation uses an ABC system with the following three cost pools:Cost Pool Total ActivityFabrication 50,000 Machine HoursOrder Processing 500 OrdersOther Not ApplicableThe company has provided the following data concerning its costs:Wages and Salaries $280,000Depreciation $200,000Occupancy $140,000Total $620,000The distribution of resource consumption across activity cost pools is given below:Fabrication Order Processing Other TotalWages/Salaries 60% 30% 10% 100%Depreciation 20% 35% 45% 100%Occupancy 10% 50% 40% 100%The activity rate for the Fabrication cost pool is:

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andromache andromache · Answer 1 · 2020-08-26T03:37:55+02:00

Answer:

$4.44 per machine hour

Explanation:

The computation of the activity rate for the fabrication cost pool is shown below:

= (Wages and salaries × given percentage + depreciation × given percentage + occupancy × given percentage) ÷ (fabrication hours)

= ($280,000 × 60% + $200,000 × 20% + $140,000 × 10%) ÷ (50,000 machine hours)

= ($168,000 + $40,000 + $14,000) ÷ (50,000 machine hours)

= $4.44 per machine hour