Latiker, Inc., manufactures and sells two products: Product Y9 and Product W0.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 $15.40 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)$31.15 per setup
B)$26.27 per setup
C)$29.95 per setup
D)$72.41 per setup

Question

Latiker, Inc., manufactures and sells two products: Product Y9 and Product W0.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 $15.40 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)$31.15 per setup 
B)$26.27 per setup 
C)$29.95 per setup 
D)$72.41 per setup

Quizplus · Accepted Answer

Activity rate = Estimated overhead cost ÷ Total expected activity
= $50,687 ÷ 700 setups = $72.41 per setup