Laugh Company Manufactures Two Models of Pens-A Standard and a Deluxe

Laugh Company manufactures two models of pens-a standard and a deluxe model. Three activities have been identified as cost drivers and the related overhead costs ($70,000) pooled together to arrive at the following information: $$\begin{array} { l l l l } \text { Product } & \begin{array} { l } \text { Number of } \\\text { Setups }\end{array} & \begin{array} { l } \text { Number of } \\\text { Components }\end{array} & \begin{array} { l } \text { Number of } \\\text { DLH }\end{array} \\\text { Standard } & 20 & 15 & 375 \\\text { Deluxe } & 30 & 45 & 225 \\\text { Costs per pool } & \$ 25,000 & \$ 36,000 & \$ 9,000\end{array}$$ If activity- based costing is used, is the overhead rate per component.

A) $117
B) $500
C) $600
D) $60

Correct Answer:

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