Question

Given the following information, determine the activity rate for setups.

Activity	Total Activity-Base Usage	Budgeted Activity Cost
Setups	10,300	$52,300
Inspections	25,100	$127,900
Assembly (dlh)	75,400	$377,000

a.$5.10

b.$5.03

c.$5.08

d.$5.00

Answer 1

Answer is Option C . 5.08

In the given case for allocation of Set up costs, the appropriate cost driver is No. of Setups i.e.10,300

Therefore ,

Activity rate for set ups = Budgerted Set Up Cost / No. of Set ups

= 52300 / 10300

= 5.07 (rounded off 5.07767)

(Hope you will understand this, please give your valuable feedback and any queries regarding this kindly mention in comment section)