The Escobar Corporation uses activity-based costing. They have three cost pools, as follows.
Activity Cost Pool | Polishing | Finishing | Other |
Activity Driver | Machine Hours | Batch Starts | None |
Budgeted Cost Pool | $100,000 | $55,000 | $112,000 |
Budgeted Activity Driver | 1,600 | 500 | n/a |
What are Escobar Corporation's activity rates for these activity cost pools?
a. |
Polishing: $62.50 per machine hour; Finishing: $110 per batch start; Other: no rate |
|
b. |
Polishing: $100,000 per machine hour; Finishing: $55,000 per batch start; Other: $112,000 |
|
c. |
Polishing: $166.88 per machine hour; Finishing: $534 per batch start; Other: no rate |
|
d. |
Polishing: $0.016 per machine hour; Finishing: $0.01 per batch start; Other: no rate |
Activity rate=Respective cost/Respective activity
Activity rate for:
Polishing=(100,000/1600)=$62.5 per machine hour
Finishing=(55000/500)=$110 per batch start
Other=No rate.
Hence the correct option is:
a.Polishing: $62.50 per machine hour; Finishing: $110 per batch start; Other: no rate
The Escobar Corporation uses activity-based costing. They have three cost pools, as follows. Activity Cost Pool...
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