Question

Terra, Inc., is an automobile company. It is planning to spend a total amount of $150,000,000 on resources in its assembling unit. The practical capacity of these resources is 1,200,000 hours. Based on the given information, calculate the capacity cost rate for the assembling unit of Terra, Inc.

a. $125 per hour
b. $115 per hour
c. $105 per hour
d. $95 per hour

Answer 1

The capacity cost rate for the assembling unit of Terra, Inc. is $125 per hour.

Step-by-step explanation:

To calculate the capacity cost rate for the assembling unit of Terra, Inc., you need to divide the total amount spent on resources by the practical capacity in hours. In this case, the total amount spent is $150,000,000 and the practical capacity is 1,200,000 hours. Dividing these two numbers gives us a capacity cost rate of $125 per hour (A).