Chrzan, Inc., manufactures and sells two products: Product EO and Product NO. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
Direct
Total
Labor-
Direct
Expected Hours Per
Labor-
Production
Unit
Hours
Product EO
460
10.6
4,876
Product NO
1,800
9.6
17,280
Total direct labor-hours
22,156
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected.
Estimated
Expected Activity
Activity Cost Pools
Measures
Activity Overhead
Cost
Product E0 Product NO
Total
Labor-related
DLHs
$304,390
4,876
17,280
22,156
Production orders
orders
63,587
1,100
1,200
2,300
Order size
MHS
587,866
5,800
5,500
11,300
$955,843
The activity rate for the Order Size activity cost pool under activity-based costing is closest to: