Arthur Company has two products: SS and DD. The compa has prepared the following

Question

Arthur Company has two products: SS and DD. The compa has prepared the following analysis, showing the estimated total cost and expected activity for each of its three activity cost pools (cutting, painting, machining): ny uses activity-based costing and Expected Activity Activity Cost Pool Cutting (# of cuts) Estimated Cost $ 20,000 14,600 Product $S Product DDTotal 400 250 500 cuts 750 jobs Painting (paint jobs) Machining (machine hours) 100 500 300 2,700 3,000 hours 90,000 The annual production and sales of Product SS is 4,547 units. The annual production and sales of Product DD is 7,913 units. What is the activity rate under the activity-based costing system for each cost pool, show your work and any calculations

Explanation / Answer

Calculate activity rate :

Activity estimated cost expected activity Activity rate Cutting 20000 500 40 per cut Painting 14600 750 19.47 per job Machining 90000 3000 30 per machine hour

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