Textbook Problem

Activity Rates

Patten Company uses activity-based costing (ABC). Patten manufactures toy cars using two activities: plastic injection molding and decal application. Patten’s 20X1 total budgeted overhead costs for these two activities are $675,000 (80% for injection molding and 20% for decal application). Molding overhead costs are driven by the number of pounds of plastic that are molded together. Decal application overhead costs are driven by the number of decals applied to toys. The budgeted activity data for 20X1 are as follows:

Required:

1. 1. Calculate the activity rate for the plastic injection molding activity (round to two decimal places).
2. 2. Calculate the activity rate for the decal application activity (round to two decimal places).