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Halsted Corp. has identified three cost pools in its manufacturing process: equipment maintenance, setups, and quality control. Total cost assigned to the three pools is $214,500, $101,400, and $153,000, respectively. Cost driver estimates for the pools are 10,000 machine hours, 150 setups, and 450 quality inspections, respectively.

Required:
Calculate the activity rate for each of Halsted's cost pools.

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Answer:

Maintenance $21.45 per Machine Hour

Setup $676 per Setup

Quality Control $340 per Inspection

Explanation:

Calculation to determine the activity rate for each of Halsted's cost pools.

Activity rate for MAINTENANCE COST

Using this formula

Activity rate= Total maintenance cost / Total machine hours

Let plug in the morning

Activity rate=$214,500/ 10,000

Activity rate= $21.45 per Machine Hour

Activity rate for SETUPS

Using this formula

Activity rate= Total Setups /Setups

Let plug in the formula

Activity rate= $101,400/150

Activity rate=$676 per Setup

Activity rate for QUALITY CONTROL

Using this formula

Activity rate= Total Quality control /Quality inspections

Let plug in the formula

Activity rate= $153,000/450

Activity rate= $340 per Inspection

Therefore the activity rate for each of Halsted's cost pools will be:

Maintenance $21.45 per Machine Hour

Setup $676 per Setup

Quality Control $340 per Inspection

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