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# What is the activity rate for the activity cost pool?

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Maxx Inc. has provided the following data from its activity-based costing system:

Activity Cost Pools Total Cost Total Activity

Designing products \$370,600 6,550 product design hours

Setting up batches \$52,678 7366 batch set-ups

Assembling products \$25,122 4,018 assembly hours

The activity rate for the "designing products" activity cost pool is:

#### Solution Preview

The activity rate for the "designing products" activity cost pool = Total cost / Total ...

#### Solution Summary

A step-by-step solution for the activity cost pool showing the computations is given.

\$2.19

## Overhead costs to activity cost pools; activity rates

Imai Draperies makes custom draperies for homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity cost pools.

Production overhead . . . . \$240,000
Office expense . . . . . . . . . 160,000
Total . . . . . . . . . . . . . . . . .400,000

Distribution of resource consumption:
Making Job
Activity Cost Pools Drapes Support Other Total
Production overhead 35% 45% 20% 100%
Office expense 15% 55% 30% 100%

The "Other" acticity cost pool consists of the costs of idle capacity and organization-sustaining costs.

The amount of activity for the year is as follows:

Activity Cost Pool Annual Activity
Making drapes . . . . . 4,000 yards
Job support . . . . . . . 100 jobs
Other . . . . . . . . . . . . Not applicable

Required:

a. Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:

Making Job
Drapes Support Other Total