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: 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.

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:  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.

Quizplus · Accepted Answer

$45,000/(7,000 + 15,000 + 8,000) = $1.50

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