McCaskey 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)$1.65 per machine-hour
B)$4.00 per machine-hour
C)$0.80 per machine-hour
D)$2.40 per machine-hour

Question

McCaskey 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)$1.65 per machine-hour 
B)$4.00 per machine-hour 
C)$0.80 per machine-hour 
D)$2.40 per machine-hour

Quizplus · Accepted Answer

Allocations to the Fabrication activity cost pool:
 11eaa48f_7b8b_80e4_9e4a_23fa45ebc005_TB2485_00 Fabrication: $66,000 F1F1F1S1F1F1F10 40,000 machine-hours = $1.65 per machine-hour

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