[The following information applies to the questions displayed below.]Assume that a pet food manufacturer is considering adding two types of pet food to its existing product line. Research had determined that good demand exists for dog food in 40-pound bags and cat food in 0.5 pound cans.The company identified the following partial list of activities, costs, and activity drivers expected for the next year: ActivityExpected CostsCost DriverMaterial handling$105,000 Number of batches madeStorage costs$820,000 Weight of finished product Dog FoodCat FoodProduction volume 100,000units 200,000unitsBatches made 200batches 150batchesWhat are the overhead rates used to apply material handling (MH) and storage costs (SC) using activity-based costing?
A. MH $525/batch; SC $.205/unit.
B. MH $700/batch; SC $8.20/lb.
C. MH $700/batch; SC $.205/lb.
D. MH $300/batch; SC $2.73/unit.
E. MH $300/batch; SC $.20/lb.
Answer: E
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