Compton Corporation
the Following Overhead Cost Information Is Available for Compton

Multiple Choice

Compton Corporation
The following overhead cost information is available for Compton Corporation for 2006:
$$\begin{array} { l l c } \text { Activity } & \text { Allocation Base } & \text { Overhead Cost } \\\hline \text { Purchasing } & \text { Number of purchase orders } & \$ 100000 \\\text { Receiving } & \text { Number of shipments received } & 60000 \\\text { Machine setups } & \text { Number of setups } & 150000 \\\text { Quality control } & \text { Number of inspections } & 50000\end{array}$$
During the year, 5000 purchase orders were issued; 20 000 shipments were received; 3000 machine setups were performed; and 4000 inspections were conducted.
-What is the overhead rate for the purchasing activity?

A) $ .05
B) $20.00
C) $72.00
D) $ 3.13