Leaper 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 Order Processing activity cost pool is closest to:
A) $726 per order
B) $1,870 per order
C) $930 per order
D) $660 per order

Question

Leaper 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 Order Processing activity cost pool is closest to:
A) $726 per order 
B) $1,870 per order 
C) $930 per order 
D) $660 per order

Quizplus · Accepted Answer

To calculate the activity rate, we need to divide the total cost of each activity cost pool by its total activity measure. 
For the Order Processing activity cost pool:
Activity rate = Total cost of Order Processing activity cost pool / Total activity measure of Order Processing activity cost pool
= $558,000 / 600 orders
= $930 per order

Therefore, the activity rate for the Order Processing activity cost pool is closest to $930 per order, which is choice C.

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