Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to five separate activity pools. The budgeted activity cost and activity base data by product are provided below.
-Activity rates are determined by
A)dividing the actual cost for each activity pool by the actual activity base for that pool
B)dividing the cost budgeted for each activity pool by the estimated activity base for that pool
C)dividing the actual cost for each activity pool by the estimated activity base for that pool
D)dividing the cost budgeted for each activity pool by the actual activity base for that pool

Question

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to five separate activity pools. The budgeted activity cost and activity base data by product are provided below.  ​
-Activity rates are determined by
A)dividing the actual cost for each activity pool by the actual activity base for that pool 
B)dividing the cost budgeted for each activity pool by the estimated activity base for that pool 
C)dividing the actual cost for each activity pool by the estimated activity base for that pool 
D)dividing the cost budgeted for each activity pool by the actual activity base for that pool

Quizplus · Accepted Answer

Activity rates are determined by dividing the cost budgeted for each activity pool by the estimated activity base for that pool. This approach allows for the allocation of overhead costs based on the expected consumption of resources, making it a key component of activity-based costing.

Panamint Systems Corporation Is Estimating Activity Costs Associated with Producing