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 | $70,000 | 6,000 | 9,000 | 20,000 |
| Activity 2 | $45,000 | 7,000 | 15,000 | 8,000 |
| Activity 3 | $82,000 | 2,500 | 1,000 | 1,625 |
Which of the following statements is true regarding this company's activity rates?
A)The activity rate under the activity-based costing system for Activity 2 is $2.00.
B)The activity rate under the activity-based costing system for Activity 2 is $16.00.
C)The activity rate under the activity-based costing system for Activity 2 is $1.50.
D)The activity rate under the activity-based costing system for Activity 2 is $19.50.
E)The activity rate under the activity-based costing system for Activity 2 is $2.81.
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Authors: Megyn Carpenter
1922375209, 978-1922375209
