A company identified the following partial list of activities, costs, and activity drivers expected for the next year: Calculate activity rates for each of the three activities using activity-based costing (ABC).
A) Extrusion: $304 per batch; handling: $32 per unit; packaging: $0.03 per unit.
B) Extrusion: $88 per batch; handling: $32 per order; packaging: $0.03 per unit.
C) Extrusion: $88 per order; handling: $32 per unit; packaging: $0.03 per batch.
D) Extrusion: $418 per batch; handling: $117.33 per order; packaging: $0.054 per unit.
E) Extrusion: $118.13 per batch; handling: $44 per order; packaging: $0.0675 per unit.

Question

A company identified the following partial list of activities, costs, and activity drivers expected for the next year:   Calculate activity rates for each of the three activities using activity-based costing (ABC).
A) Extrusion: $304 per batch; handling: $32 per unit; packaging: $0.03 per unit. 
B) Extrusion: $88 per batch; handling: $32 per order; packaging: $0.03 per unit. 
C) Extrusion: $88 per order; handling: $32 per unit; packaging: $0.03 per batch. 
D) Extrusion: $418 per batch; handling: $117.33 per order; packaging: $0.054 per unit. 
E) Extrusion: $118.13 per batch; handling: $44 per order; packaging: $0.0675 per unit.

Quizplus · Accepted Answer

Extrusion activity rate: $83,600/(200 + 750) batches = $88 per batch
Handling costs rate: $8,800/(75 + 200) orders = $32 per order
Packaging activity rate: $40,500/(750,000 + 600,000) units = $0.03 per unit

A Company Identified the Following Partial List of Activities, Costs