Question

Pharoah Manufacturing uses an activity-based costing system for its cutting department. The activity cost totals $154546. The number of cuts is the cost driver. The cutting department processed a total of 9600 batches with an average cuts per batch of 6 and total cuts of 46550. What is the activity rate for the cutting department? $3.32 per cut $1600.00 per cut $257.58 per batch $16.10 per cut

Answer 1

$3.32 per cut

Step-by-step explanation:

The computation of the activity rate for the cutting department is shown below:

Activity rate is

= Total activity cost ÷ Total cuts

= $154,546 ÷ 46,550 cuts

= $3.32 per cut

We simply applied the above formula so that the correct value could come

And, the same is to be considered

hence, the first option is correct