Accurso,Inc. ,manufactures and sells two products: Product J9 and Product S5.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 $22.50 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)$85.74 per setup
B)$26.55 per setup
C)$82.10 per setup
D)$59.19 per setup

Question

Accurso,Inc. ,manufactures and sells two products: Product J9 and Product S5.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 $22.50 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)$85.74 per setup 
B)$26.55 per setup 
C)$82.10 per setup 
D)$59.19 per setup

Quizplus · Accepted Answer

Activity rate = Estimated overhead cost ÷ Total expected activity
= $37,170 ÷ 1,400 setups = $26.55 per setup