Angara Corporation uses activity-based costing to determine product costs for ex
ID: 342201 • Letter: A
Question
Angara Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: Activity Cost Pool (and Activity Measure) Total Cost Machine related (machine-hours) $ 137,600 Batch setup (setups) $ 532,800 General factory (direct labor-hours) $ 105,300 Total Activity Activity Cost Pools Product X Product Y Total Machine related 1,000 7,000 8,000 Batch setup 3,000 5,000 8,000 General factory 7,000 2,000 9,000 The activity rate for the batch setup activity cost pool is closest to: Multiple Choice $177.60 $66.60 $106.60 $97.00
Explanation / Answer
The activity rate = Overhead Amount for Batch Setup / Total number of setups
= $ 532,800 / 8,000 setups
= $ 66.60
Hence the correct answer is $ 66.60