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?

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