Question: Fruits on High Ltd uses three activity cost pools to assign costs to customers in order to assess customer profitability. Each activity cost pool has

Fruits on High Ltd uses three activity cost pools to assign costs to customers in order to assess customer profitability. Each activity cost pool has a unique cost driver to apply indirect costs to customers.

Activity

Costs Driver

Estimated indirect costs

Estimated total usage of cost driver

Sales Returns

Number of returns

$200 000

5 500 returns

Order Processing

Lines on order

$550 000

550 000 lines

Rush Orders

Number of rush orders

$300 000

12 000 orders

Required:

Calculate the activity cost rate for each activity.

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