Asked by BRANDI PRINCE on Jul 05, 2024

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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

Activity Rate

The estimated activity cost divided by estimated activity-base usage.

Production Setup

The preparation and arrangement of tools, machines, and equipment necessary for the commencement of production operations in a manufacturing environment.

  • Apply activity-based costing to calculate overhead and its impact on pricing.
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Verified Answer

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nathan mcrimmonJul 06, 2024
Final Answer :
C
Explanation :
The total cost per unit is $43, with $30 being variable costs. This means the fixed costs (including production setup) are $13 per unit ($43 total cost - $30 variable cost). However, the question seems to lack sufficient information to directly calculate the activity rate for production setup, such as the number of setups or the proportion of the $13 that pertains to setups specifically. The provided answer (C) $625 per setup, cannot be accurately determined with the given information. My explanation previously assumed a direct calculation was possible, but without additional data regarding setups, the correct activity rate for production setup cannot be determined from the information provided.