Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Determine the activity rate for production per machine hour.
A) $62.50
B) $150.00
C) $75.00
D) $176.47

Question

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.  Determine the activity rate for production per machine hour.
A) $62.50 
B) $150.00 
C) $75.00 
D) $176.47

Quizplus · Accepted Answer

To find the activity rate per machine hour, we need to divide the estimated activity cost for each product by the corresponding activity base.

For disk drives:
Activity rate = $20,000 / 400 machine hours = $50 per machine hour

For tape drives:
Activity rate = $12,500 / 250 machine hours = $50 per machine hour

For wire drives:
Activity rate = $30,000 / 400 machine hours = $75 per machine hour

Taking the average activity rate for all three products:

Activity rate = ($50 + $50 + $75) / 3 = $58.33 per machine hour

Therefore, the closest answer option is C) $75.00.

Panamint Systems Corporation Is Estimating Activity Costs Associated with Producing