Hochberg Corporation uses an activity-based costing system with the following three activity cost pools:
Activity Cost Pool
Total Activity
Fabrication
30,000 machine-hours
Order processing
300 orders
Other
Not applicable
The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs.
The company has provided the following data concerning its costs:
Wages and salaries
$340,000
Depreciation
160,000
Occupancy
220,000
Total
$720,000
The distribution of resource consumption across activity cost pools is given below:
Activity Cost Pools
Fabrication
Order Processing
Other
Total
Wages and salaries
30%
60%
10%
100%
Depreciation
15%
50%
35%
100%
Occupancy
15%
55%
30%
100%
The activity rate for the Fabrication activity cost pool is closest to:
A) $5.30 per machine-hour
B) $3.60 per machine-hour
C) $7.20 per machine-hour
D) $4.80 per machine-hour