Arthur Andersen LLP's strategic consulting team had been hired to advise Enron Inc. on their costing system. They correctly advise them that the activity-rate method involves:

Multiple Choice

• dividing the total activity driver by the total activity cost.

• calculating the proportion of each activity driver used by each product.

• calculating an activity rate that is similar to the predetermined overhead rate.

• multiplying the total activity cost by the total activity driver.