In activity-based costing, the total activity in an activity cost pool can be computed by:
A)dividing the total overhead cost in the activity cost pool by the activity cost pool's activity rate.
B)multiplying the total overhead cost in the activity cost pool by the activity cost pool's activity rate.
C)dividing the activity cost pool's activity rate by the direct labor-hours required to make a product.
D)multiplying the activity cost pool's activity rate by the direct labor-hours required to make a product.

Question

Quizplus · Accepted Answer

The total activity in an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by the activity cost pool's activity rate. This gives the amount of activity that has been allocated the overhead cost.

In Activity-Based Costing, the Total Activity in an Activity Cost