a manufacturer uses activity - based costing to assign overhead cost to products. budgeted cost information…

a manufacturer uses activity - based costing to assign overhead cost to products. budgeted cost information for its activities follows. the activity rate for purchasing is:\nactivity\nbudgeted cost\nactivity cost driver\nbudgeted activity usage\npurchasing\n$405,000\npurchase orders\n13,500 purchase orders\nfactory services\n$96,000\nsquare feet\n15,000 square feet\nsetup\n$195,000\nsetups\n150 setups\nmultiple choice\n$6.40 per square foot.\n$27.00 per purchase order.\n$30.00 per purchase order.\n$1,300.00 per setup.\n$27.00 per square foot.

a manufacturer uses activity - based costing to assign overhead cost to products. budgeted cost information for its activities follows. the activity rate for purchasing is:\nactivity\nbudgeted cost\nactivity cost driver\nbudgeted activity usage\npurchasing\n$405,000\npurchase orders\n13,500 purchase orders\nfactory services\n$96,000\nsquare feet\n15,000 square feet\nsetup\n$195,000\nsetups\n150 setups\nmultiple choice\n$6.40 per square foot.\n$27.00 per purchase order.\n$30.00 per purchase order.\n$1,300.00 per setup.\n$27.00 per square foot.

Answer

Explanation:

Step1: Recall activity - based costing formula

Activity rate = Budgeted cost / Budgeted activity usage

Step2: Identify relevant values

Budgeted cost for purchasing is $405,000 and budgeted activity usage for purchasing is 13,500 purchase - orders.

Step3: Calculate activity rate

Activity rate=$\frac{405000}{13500}= 30$ per purchase - order

Answer:

$30.00 per purchase order