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What is the activity rate for production setup

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Reference no: EM13335189

Miramar Industries manufactures two products, A and B. The manufacturing operating involves three overhead activities - production setup, material handling, and general factory activities. Miramar uses activity-based costing to allocate overhead to products. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities:

Activity Cost Activity Base
Production Setup $250,000 Number of setups
Material Handling $150,000 Number of parts
General Overhead $80,000 Number of direct labor hours



Each product's total activity in each of the three areas are as follows:


 Product A Product B
Number of setups 100 300
Number of parts 40,000 20,000
Number of direct labor hours 8,000 12,000




What is the activity rate for Production Setup?

a. $2,500 per setup b. $833 per setup c. $625 per setup d. $400 per setup

Reference no: EM13335189

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