Austad Corporation uses activity-based costing to determine product costs for ex

Question

Austad Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: Activity Cost Pools (and Activity Measures) Total Cost Machine related (machine-hours) $67,500 Batch setup (setups) $273,700 General factory (direct labor-hours) $204,000 Total Activity Activity Cost Pools Product X Product Y Total Machine related 4,000 1,000 5,000 Batch setup 3,000 4,000 7,000 General factory 1,000 7,000 8,000 The activity rate for the batch setup activity cost pool is closest to: $91.20 $68.40 $77.90 $39.10

Explanation / Answer

activity rate for the batch setup activity =273700/(3000+4000) =$39.1

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