Provenzano Corporation manufactures two products: Product B56Z and Product D32N. The company is considering implementing...
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Accounting
Provenzano Corporation manufactures two products: Product B56Z and Product D32N. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products B56Z and D32N.
Activity Cost Pool
Activity Measure
Total Cost
Total Activity
Machining
Machine-hours
$330,000
15,000
MHs
Machine setups
Number of setups
$ 50,000
100
setups
Product design
Number of products
$ 88,000
2
products
Order size
Direct labor-hours
$280,000
10,000
DLHs
Activity Measure
Product B56Z
Product D32N
Machine-hours
6,000
9,000
Number of setups
80
20
Number of products
1
1
Direct labor-hours
6,000
4,000
What is the activity rate for the Machine Setups activity cost pool?
Multiple Choice
$625.00 per setup
$500.00 per setup
$3.33 per setup
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