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What the activity rate for inspections would be

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Reference no: EM132805526

Problem 1: Mooshu Company identifies three activities in its manufacturing process: machine setups, machining, and inspections. Estimated annual overhead cost for each activity is $150,000, $325,000, and $87,500 respectively. The cost driver for each activity and the expected annual usage are: number of setups 2,500, machine hours 25,000, and number of inspections 1,750. Previously, the company estimated overhead costs based on machine hours, however, the company is now interested in exploring activity-based costing. The activity rate for inspections would be:

a. $60 per inspection

b. $321.43 per inspection

c. $50 per inspection

d. $22.50 per inspection

Reference no: EM132805526

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