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 $90,000 8,000 11,000 22,000

Activity 2 $65,000 9,000 17,000 10,000

Activity 3 $122,000 4,500 3,000 3,625

Which of the following statements is true regarding this company's activity rates?

Multiple Choice

• The activity rate under the activity-based costing system for Activity 2 is $2.20.
• The activity rate under the activity-based costing system for Activity 2 is $10.97.
• The activity rate under the activity-based costing system for Activity 2 is $1.81.
• The activity rate under the activity-based costing system for Activity 2 is $14.97.
• The activity rate under the activity-based costing system for Activity 2 is $3.62.