Answer the Following Questions Using the Information Below:
Zitriks Corp

question 163

Multiple Choice

Answer the following questions using the information below:
Zitriks Corp. manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period:
$\begin{array}{lll}\text { Cost Pool }&\text { Overhead Costs }&\text { Activity-cost driver }\\\text { Materials handling } & \$ 45,000 & 90,000 \text { orders } \\\text { Machine maintenance } & \$ 300,000 & 15,000 \text { maintenance hours } \\\text { Setups } & \$ 270,000 & 45,500 \text { æetups } \\\text { Inspections } & \$ 139,750 & 21,500 \text { inspections } \\\text { Total support costs } &\$ 754,750 &\end{array}$

$\text { Production Estimates }$
$\begin{array}{l}\text { Production units: }\\\text { Regular } & =8,000,000 \text { units } \\\text { Jumbo } & =16,000,000 \text { units } \\\text { Machine-hours } & =200,000 \mathrm{mh} \\\text { Labor-hours } & =400,000 \mathrm{dlh}\end{array}$ Expected direct costs amounts to $960,000 for the period. Support cost requirements of both products are substantially different from one another. Zitriks uses an ABC costing system.
-The setups activity-cost driver rate is ________.

• A) $6.50 per setup
• B) $5.93 per setup
• C) $5.75 per setup
• D) $5.24 per setup

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