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Washington, Inc

Accounting Apr 01, 2021

Washington, Inc. produces two different products (Product C and Product 2) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver The cost of Machining is $750,000, while the cost of Inspection is $90,000. The activity drivers are used as follows: 
Machine hours Number of batches 
Product C Product 2 Total 1,000 3,000 4,000 45 15 60 
What is the activity rate for Machining? Multiple Choice O$5750_00 per machine hour 

Expert Solution

Computation of Activity Rate of Machining

Activity Rate of Machining = Total Cost of Machining/Total Number of Machine Hours

= $750,000/4,000

Activity rate of inspection = $187.50 per machine hour

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