The activity rate for the Order Processing activity cost pool is closest to 1 answer below »
Laguna Corporation has provided the following data concerning its overhead costs for the coming year:
Wages and salaries
$260,000
Depreciation
100,000
Rent .
180,000
Total
$540,000
The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year:
Activity Cost Pool
Total Activity
Assembly
50,000 labor-hours
Order processing
400 orders
Other
Not applicable
The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization-sustaining costs.
The distribution of resource consumption across activity cost pools is given below:
Activity Cost Pools
Assembly
Order Processing
Other
Total
Wages and salaries
60%
20%
20%
100%
Depreciation
5%
60%
35%
100%
Rent
30%
30%
40%
100%
The activity rate for the Order Processing activity cost pool is closest to:
A) $415 per order
B) $405 per order
C) $495 per order
D) $270 per order