Final answer:
To find the best activity rate for moving, divide the expected cost by the expected direct labor hours to get $4 per labor hour, or divide by the expected number of moves to get $2 per move.
Step-by-step explanation:
The question asks to calculate the best activity rate for moving given that the expected cost is $80,000, expected direct labor hours are 20,000, and the expected number of moves is 40,000. The activity rate for moving is the cost per unit of the activity base used to allocate the overhead costs to products or services. In this case, we can calculate the activity rate based on direct labor hours or the number of moves.
The activity rate based on direct labor hours would be calculated by dividing the expected cost by the expected direct labor hours:
Activity Rate = Expected Cost / Expected Direct Labor Hours
Activity Rate = $80,000 / 20,000 hours
Activity Rate = $4 per labor hour
Similarly, the activity rate based on the number of moves would be:
Activity Rate = Expected Cost / Expected Number of Moves
Activity Rate = $80,000 / 40,000 moves
Activity Rate = $2 per move
Depending on the basis chosen for allocation, the firm can decide the best activity rate to use for its cost calculations.