Question

Two Step Dance manufactures all types of shoes for the avid dancer, like ballet slippers and tap shoes. Two Step Dance uses the activity based costing method to allocate manufacturing overhead to its products. Below is a table summarizing the Estimated MOH costs and their respective drivers. Using this information, what is the MOH Rate for the Inspecting activity? Round your answer to the nearest penny (i.e. x.xx).

Activity	Estimated MOH	Estimated Basis
Purchasing	$20,000	2,500 purchase orders
Assembling	$75,000	60,000 DL hours
Packaging	$35,000	5,000 units
Inspecting	$10,000	2,000 batches

Answer 1

MOH rate for Inspecting Activity => Estimated Overhead/No. Of batches.

MOH rate for Inspecting Activity => ($10,000 / 2,000) = $5 per batch.

If you have any doubts please comment on the answer.