Question
A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of
| A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: |
| Budgeted Activity | ||||
| Activity Cost Pool | Budgeted Cost | Product A | Product B | Product C |
| Activity 1 | $75,000 | 6,500 | 9,500 | 20,500 |
| Activity 2 | $50,000 | 7,500 | 15,500 | 8,500 |
| Activity 3 | $92,000 | 3,000 | 1,500 | 2,125 |
Which of the following statements is true regarding this company's activity rates?
The activity rate under the activity-based costing system for Activity 2 is $2.05.
The activity rate under the activity-based costing system for Activity 2 is $13.89.
The activity rate under the activity-based costing system for Activity 2 is $1.59.
The activity rate under the activity-based costing system for Activity 2 is $17.53.
The activity rate under the activity-based costing system for Activity 2 is $3.02.
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