Tatman Corporation uses an activity-based costing system with the following three activity cost pools: The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs.
The company has provided the following data concerning its costs:
The distribution of resource consumption across activity cost pools is given below: The activity rate for the Fabrication activity cost pool is closest to:
A) $3.30 per machine-hour
B) $13.20 per machine-hour
C) $10.30 per machine-hour
D) $8.80 per machine-hour

Question

Tatman Corporation uses an activity-based costing system with the following three activity cost pools:  The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs.
The company has provided the following data concerning its costs:
 The distribution of resource consumption across activity cost pools is given below:  The activity rate for the Fabrication activity cost pool is closest to:
A) $3.30 per machine-hour 
B) $13.20 per machine-hour 
C) $10.30 per machine-hour 
D) $8.80 per machine-hour

Quizplus · Accepted Answer

Allocations to the Fabrication activity cost pool:
 11eacbfc_c664_2375_8ffe_37ad6cf288a7_TB7552_00 Fabrication: $103,000 ÷ 10,000 machine-hours = $10.30 per machine-hour

Tatman Corporation Uses an Activity-Based Costing System with the Following