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:
-What are the activity rates for the three activities under activity-based costing?
A)(1)$2.00; (2)$3.00; (3)$3.50.
B)(1)$3.50; (2)$1.50; (3)$32,80.
C)(1)$3.50; (2)$3.00; (3)$16.00.
D)(1)$2.00; (2)$1.50; (3)$16.00.
E)(1)$2.00; (2)$1.50; (3)$32.80.

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 the company's three activity cost pools are shown in the following table: 
-What are the activity rates for the three activities under activity-based costing?
A)(1)$2.00; (2)$3.00; (3)$3.50. 
B)(1)$3.50; (2)$1.50; (3)$32,80. 
C)(1)$3.50; (2)$3.00; (3)$16.00. 
D)(1)$2.00; (2)$1.50; (3)$16.00. 
E)(1)$2.00; (2)$1.50; (3)$32.80.

Quizplus · Accepted Answer

The correct answer is D because the activity rates are calculated by dividing the total cost of each activity by the total number of activity units. The total cost of each activity is given in the question, and the total number of activity units is given in the table.

A Company Uses Activity-Based Costing to Determine the Costs of Its