The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period.

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Using activity-based costing for assigning overhead costs, the activity rate for machine setups is:
A) $60 per setup
B) $100 per setup
C) $120 per setup
D) $240 per setup
E) $80 per setup

Question

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period.

- 
Using activity-based costing for assigning overhead costs, the activity rate for machine setups is:
A) $60 per setup 
B) $100 per setup 
C) $120 per setup 
D) $240 per setup 
E) $80 per setup

Quizplus · Accepted Answer

The activity rate for machine setups is $60 per setup. This is because the total overhead cost for machine setups is $120,000, and the total number of machine setups is 2,000.

The Homer Corporation Produces Two Products, and Reports the Following