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McCaskey Corporation uses an activity-based costing system with the following three activity cost pools: ...

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Question

Accounting

McCaskey Corporation uses an activity-based costing system with the following three activity cost pools:

Activity Cost Pool

Total Activity
Fabrication 50,000 machine-hours
Order processing 625 orders
Other N/A

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 $461,000
Depreciation 123,000
Occupancy 207,000
Total

$791,000

The distribution of resource consumption across activity cost pools is given below:

Activity Cost Pools
Fabrication Order Processing Other Total
Wages and salaries 15% 65% 20% 100%
Depreciation 15% 40% 45% 100%
Occupancy 20% 75% 5% 100%

The activity rate for the Fabrication activity cost pool is closest to:

$2.58 per machine-hour

$0.88 per machine-hour

$3.96 per machine-hour

$2.48 per machine-hour

Answer & Explanation Solved by verified expert
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