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.
