Activity Rates Patten Company uses activity-based costing (ABC). Patten manufactures toy cars using two activities: plastic...

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Activity Rates Patten Company uses activity-based costing (ABC). Patten manufactures toy cars using two activities: plastic i

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Answer 1

Answer #1

Activity Rates

Activity rate = Apportioned budgeted overhead cost / Activity driver

Requirement 1:

Activity rate for the Plastic Injection molding

Apportioned budgeted overhead cost = $508,000 * 90% = $457,200

Activity driver = 2,030,000

Activity rate = $457,200 / 2,030,000 = $0.23 per pound molded

Requirement 2:

Activity rate for the decal application

Apportioned budgeted overhead cost = $508,000 * 10% = $50,800

Activity driver = 151,000

Activity rate = $50,800 / 151,000 = $0.34 per decal applied

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