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A company identified the following partial list of activities, costs, and activity drivers expected for the next year:

### Activities, Drivers, and Costs
\begin{tabular}{|c|l|l|}
\hline
Activity & \multicolumn{1}{|c|}{Expected Costs} & Cost Driver \\
\hline
Extrusion Costs & \$83,600 & Number of Batches Made \\
\hline
Handling Costs & \$8,800 & Number of Orders Filled \\
\hline
Packaging Costs & \$40,500 & Number of Units Made \\
\hline
\end{tabular}

### Product Details
The company produces two products, \( A \) and \( B \), as follows:

\begin{tabular}{|l|l|l|}
\hline
\multicolumn{1}{|c|}{Description} & \multicolumn{1}{|c|}{Product A} & \multicolumn{1}{|c|}{Product B} \\
\hline
Production Volume & 750,000 units & 600,000 units \\
\hline
Batches Made & 200 batches & 750 batches \\
\hline
Orders Filled & 75 orders & 200 orders \\
\hline
\end{tabular}

What is the activity rate for Handling Costs?
[tex]\[\square\][/tex]



Answer :

GinnyAnswer
To determine the activity rate for Handling Costs, we need to follow these steps:

1. Identify the Handling Costs:
The expected cost for handling, as provided, is $8,800.

2. Determine the Cost Driver for Handling Costs:
The cost driver for handling costs is the Number of Orders Filled.

3. Find the Total Number of Orders Filled:
The company fills orders for two products:
- For Product A, 75 orders are filled.
- For Product B, 200 orders are filled.

Adding these together gives the total number of orders filled:
[tex]\[ \text{Total Orders Filled} = 75 + 200 = 275 \][/tex]

4. Calculate the Activity Rate for Handling Costs:
The activity rate is calculated by dividing the total handling costs by the total number of orders filled:
[tex]\[ \text{Activity Rate for Handling Costs} = \frac{\text{Handling Costs}}{\text{Total Orders Filled}} \][/tex]
Given that the handling costs are $8,800 and the total number of orders filled is 275, we get:
[tex]\[ \text{Activity Rate for Handling Costs} = \frac{8800}{275} = 32.0 \][/tex]

Conclusion:
The activity rate for Handling Costs is \$32.0 per order filled.

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