Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. There are three activity cost pools, with estimated costs and expected activity as follows:

-The activity rate for the batch setup activity cost pool is closest to:
A) $70.40
B) $29.40
C) $26.10
D) $234.90

Question

Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. There are three activity cost pools, with estimated costs and expected activity as follows:

-The activity rate for the batch setup activity cost pool is closest to:

-The activity rate for the batch setup activity cost pool is closest to:
A) $70.40 
B) $29.40 
C) $26.10 
D) $234.90

Quizplus · Accepted Answer

The activity rate is calculated by dividing the total cost of the activity by the total activity driver quantity. Without specific numbers, the closest rate provided is $26.10.

Accola Company Uses Activity-Based Costing