Washington,Inc.produces two different products (Product C and Product 2)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $750,000,while the cost of Inspection is $90,000.Usage of the activity drivers are as follows: What is the activity rate for Machining?

A)$187.50 per machine hour
B)$166.67 per machine hour
C)$250.00 per machine hour
D)$5750.00 per machine hour

Question

Washington,Inc.produces two different products (Product C and Product 2) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $750,000,while the cost of Inspection is $90,000.Usage of the activity drivers are as follows: What is the activity rate for Machining?

A)$187.50 per machine hour 
B)$166.67 per machine hour 
C)$250.00 per machine hour 
D)$5750.00 per machine hour

Quizplus · Accepted Answer

To calculate the activity rate for Machining, we divide the cost of Machining ($750,000) by the total machine hours used (4,000).

Activity rate for Machining = $750,000 ÷ 4,000 machine hours = $187.50 per machine hour

Therefore, the correct answer is A.