Problem:
Hochberg Corporation uses an activity-based costing system with the following three activity cost pools:
|
Activity Cost Pool
|
Total Activity
|
|
Fabrication
|
30,000 machine-hours
|
|
Order processing
|
300 orders
|
|
Other
|
Not applicable
|
The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs.
The company has provided the following data concerning its costs:
|
Wages and salaries
|
$340,000
|
|
Depreciation
|
160,000
|
|
Occupancy
|
220,000
|
|
Total
|
$720,000
|
The distribution of resource consumption across activity cost pools is given below:
|
|
Activity Cost Pools
|
|
|
Fabrication
|
Order Processing
|
Other
|
Total
|
|
Wages and salaries
|
30%
|
60%
|
10%
|
100%
|
|
Depreciation
|
15%
|
50%
|
35%
|
100%
|
|
Occupancy
|
15%
|
55%
|
30%
|
100%
|
The activity rate for the Fabrication activity cost pool is closest to: