Hochberg corporation uses an activity-based costing system with the following three activity cost pools: activity cost pool total activity fabrication 50,000 machine-hours order processing 625 orders other not applicable the other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs. the company has provided the following data concerning its costs: wages and salaries $ 433,000 depreciation 160,000 occupancy 169,000 total $ 762,000 the distribution of resource consumption across activity cost pools is given below: activity cost pools fabricating order processing other total wages and salaries 20% 70% 10% 100% depreciation 10% 30% 60% 100% occupancy 10% 70% 20% 100% the activity rate for the fabrication activity cost pool is closest to:

The correct answer is 2.39

Explanation:

TOTAL WAGES AND SALARIES = $433,000

DEPRECIATION  = $160,000

OCCUPANCY = $169,000

TOTAL  = $762,000

here for calculating the activity rate for activity cost pool , we will only use the given percentages of wages and salaries, depreciation and occupancy in the activity cost pool -

                         Amount            Activity cost pool              Amount allocated

Wages             $433,000                     20%                            $86,600  

Depreciation   $160,000                      10%                             $16,000

Occupancy      $169,000                      10%                             $16,900

TOTAL                                                                                       $119,500

Cost driver machine hours                                                       50,000

Rate per machine hour                                                        $119,500 / 50,000

                                                                                                    2.39

Therefore the activity rate for activity cost pool is 2.39

answer; proclamation of 1763;