Mcleese,Inc. ,manufactures and sells two products: Product I6 and Product L1.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $26.60 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity: The activity rate for the Machine Setups activity cost pool under activity-based costing is closest to:
A)$103.32 per setup
B)$63.58 per setup
C)$89.04 per setup
D)$100.60 per setup

Question

Mcleese,Inc. ,manufactures and sells two products: Product I6 and Product L1.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:  The direct labor rate is $26.60 per DLH.The direct materials cost per unit for each product is given below:  The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity:  The activity rate for the Machine Setups activity cost pool under activity-based costing is closest to:
A)$103.32 per setup 
B)$63.58 per setup 
C)$89.04 per setup 
D)$100.60 per setup

Quizplus · Accepted Answer

Activity rate = Estimated overhead cost ÷ Total expected activity
= $69,938 ÷ 1,100 setups = $63.58 per setup