Reference: 05-10
Austad Corporation Uses Activity-Based Costing to Determine Product

Multiple Choice

Reference: 05-10
Austad Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Activity Cost Pools (and Activity Measures) } & \begin{array} { l } \text { Estimated } \\\text { Overhead Cost }\end{array} \\\hline \text { Machine related (machine-hours) } & \$ 67,500 \\\hline \text { Batch setup (setups) } & \$ 273,700 \\\hline \text { General factory (direct labour-hours) } & \$ 204,000 \\\hline\end{array}\\\begin{array} { | l | l | l | l | } \hline & & { \text { Expected Activity } } \\\hline \text { Activity Cost Pools } & \text { Total } & \text { Product } X & \text { Product } Y \\\hline \text { Machine related } & 5,000 & 4,000 & 1,000 \\\hline \text { Batch setup } & 7,000 & 3,000 & 4,000 \\\hline \text { General factory } & 8,000 & 1,000 & 7,000 \\\hline\end{array}\end{array}$$
-The activity rate for the batch setup activity cost pool is closest to:

A) $68.40.
B) $39.10.
C) $77.90.
D) $91.20.