Asked by Jalen Denoncourt on May 11, 2024

verifed

Verified

The activity rate for the batch setup activity cost pool is closest to:

A) $48.40 per setup
B) $38.70 per setup
C) $74.30 per setup
D) $193.50 per setup

Batch Setup

The process of preparing machines and equipment for a specific batch of production, including adjustments and calibrations.

Activity Cost Pool

A way to aggregate all costs associated with a particular business activity, facilitating more accurate allocation of overheads to products or services.

  • Analyze and determine the rates of different activities across various cost pools as prescribed by activity-based costing.
verifed

Verified Answer

AA
Arjwan AlaniMay 12, 2024
Final Answer :
B
Explanation :
To calculate the activity rate for the batch setup activity cost pool, we need to divide the total cost of $154,800 by the total number of setups, which is 4,000.

Activity rate = Total cost / Total number of setups
Activity rate = $154,800 / 4,000
Activity rate = $38.70 per setup

Therefore, the closest activity rate is option B) $38.70 per setup.
Explanation :
Activity rate = Estimated overhead cost ÷ Expected activity = $387,000 ÷ 10,000 setups = $38.70 per setup