McCaskey Corporation uses an activity-based costing system with the following three activity cost pools:

Activity Cost Pool Total Activity

Fabrication................ 40,000 machine-hours

Order processing....... 500 orders

Other.......................... Not applicable

The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs. The company has provided the following data concerning its costs:

Wages and salaries....... $420,000

Depreciation................. 100,000

Occupancy................... 120,000

Total............................. 640,000

The distribution of resource consumption across activity cost pools is given below: Fabrication Order Processing Other TOTAL

Wages and salaries 5% 80% 15% 100%

Depreciation 1545 40 100

Occupancy 25 50 25 100

The activity rate for the Fabrication activity cost pool is closest to

a) $1.65 per machine-hour

b) $4.00 per machine-hour

c) $0.80 per machine-hour

d) $2.40 per machine-hour