Question

Leaper Corporation uses an activity-based costing system with the following three activity cost pools: Activity Cost Pool Fabrication Order processing Other Total Activity machine- 45,000 hours 250 orders Not applicable bints 8 01:09:01 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 Depreciation Occupancy Total $ 490,000 205,000 225,000 $920,000 The distribution of resource consumption across activity cost pools is given below: Wages and salaries Depreciation Occupancy Activity Cost Pools Fabrication Order Processing 30% 25% 20% 50% 30% 25 Other 45% 30% 45% Total 100% 100% 1008 The activity rate for the Order Processing activity cost pool is closest to:

Answer 1

Activity rate for Order Processing activity cost pool = $ 1,125 per order

Explanation

Computation of the activity rate for the Order Processing activity cost pool
Activity cost pool	Amount	Distribution of	Order Processing
		Activity Cost Pools	Cost
	(A)	(B)	(A x B)
Wages and salaries	$    490,000.00	25%	$       122,500.00
Depreciation	$    205,000.00	50%	$       102,500.00
Occupancy	$    225,000.00	25%	$         56,250.00
	Total Order Processing cost		$     281,250.00
	Total Activity (Orders)		250.00
	Activity Rate		$           1,125.00	per order