Question

Privott, Inc., manufactures and sells two products: Product Z9 and Product N0. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product Z9 Product N0 Total Labor-related DLHs $ 326,018 6,600 3,200 9,800 Product testing tests 46,747 500 600 1,100 Order size MHs 472,108 4,200 4,500 8,700 $ 844,873 The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:

Answer 1

$33.27 per DLH

Step-by-step explanation:

Calculation for the activity rate for the Labor-Related activity cost pool under activity-based costing

Using this formula

Activity rate = Estimated overhead cost ÷ Total expected activity

Let plug in the formula

Activity rate =$ 326,018 ÷ 9,800 DLHs

Activity rate = $33.27 per DLH

Therefore the activity rate for the Labor-Related activity cost pool under activity-based costing is closest to $33.27 per DLH