A&W Manufacturing uses an activity-based costing system for its cutting department.The activity cost totals $148,000.The number of cuts is the cost driver.The cutting department processed a total of 9,000 batches with an average cuts per batch of 6 and total cuts of 46,250.What is the activity rate for the cutting department?
A)$1,500 per cut
B)$247 per cut
C)$16.45 per batch
D)$3.20 per cut

Question

Quizplus · Accepted Answer

The activity rate is calculated by dividing the total activity cost by the total number of cuts. So, $148,000 / 46,250 cuts = $3.20 per cut.

A&W Manufacturing Uses an Activity-Based Costing System for Its Cutting