Question

Required information E4-3, E4-4 and E4-5 Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows: Activity Cost Pools Machining Designing costs Setup costs Total Cost of Pool Cost Driver $345, 220 Number of machine hours 79,900 Number of design hours 70,983 Number of batches Estimated Cost Driver 84,200 8,500 495 E4-3 (Algo) Calculating Activity Rates, Classifying Activities (LO 4-2, 4-4] Required: 1. Compute the activity rate for each activity. 2. Classify each activity as facility, product, batch, or unit level. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the activity rate for each activity. (Round your answers to 2 decimal places.) Activity Rate ning Activity Machining Design Costs Setup per Machine Hour per Design Hour per Batch

Answer 1

Requirement 1

	Activity rate
Machining	$               4.10	Per Machine hour
Designing costs	$               9.40	Per design hour
Setup costs	$          143.40	Per batch

Requirement 2

	Classification
Machining	Batch level
Designing costs	Product level
Setup costs	Batch level

Working

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost (A)	Expected Activity (B)	Activity rate (A/B)
Machining	Number of Machine hour	$ 345,220	84200	$               4.10	Per Machine hour
Designing costs	Number of design hour	$ 79,900	8500	$               9.40	Per design hour
Setup costs	Number of batch	$ 70,983	495	$          143.40	Per batch