Question

Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows:

Activity Cost Pools	Total Cost of Pool		Cost Driver	Estimated Cost Driver
Machining	$	259,000	Number of machine hours		85,600
Designing costs		59,000	Number of design hours		7,800
Setup costs		72,000	Number of batches		370

Required:
1. Compute the activity rate for each activity. (Round your answers to 2 decimal places.)

Activity	Activity Rate
Machining		per Machine Hrs
Design Costs		per Design Hrs
Setup		per Batch

2. Classify each activity as facility, product, batch, or unit level.

Machining
Design
Setup

Answer 1

• Requirement 1

Activity	Activity Rate
Machining	$               3.03	per Machine Hrs
Design Costs	$               7.56	per Design Hrs
Setup	$            194.59	per Batch

--Working

Activity Cost Pools	Total Cost of Pool	Cost Driver	Estimated Cost Driver	Activity Rate
	[A]		[B]	[C = A/B]
Machining	$259,000	Number of machine hours	85600	$                    3.03
Designing costs	$59,000	Number of design hours	7800	$                    7.56
Setup costs	$72,000	Number of batches	370	$               194.59

• Requirement 2

Machining	Unit Level
Design	Product Level
Setup	Batch Level