Selena Company has two products: A and B. The company uses activity-based costing. The estimated total...
Selena Company has two products: A and B. The company uses
activity-based costing. The estimated total cost and expected
activity for each of the company's three activity cost pools are as
follows:
| Expected Activity | ||||
| Activity Cost Pool | Estimated Cost | Product A | Product B | Total |
| Activity 1 | $17,600 | 800 | 300 | 1,100 |
| Activity 2 | 12,000 | 500 | 200 | 700 |
| Activity 3 | 26,000 | 800 | 400 | 1,200 |
The activity rate under the activity-based costing system for
Activity 3 is closest to which of the following?
Homework Answers
|
Activity rate = Estimated overhead/Total expected activity = 26,000/1200 = 21.67 Comment if you face any issues. Thank you |
|
o find the activity rate for Activity 3 under the activity-based costing system, we need to divide the estimated cost for Activity 3 by the total activity for all products combined. The formula for calculating the activity rate is as follows:
Activity Rate = Estimated Cost / Total Activity
Let's calculate the activity rate for Activity 3:
Estimated Cost for Activity 3 = $26,000 Total Activity for Activity 3 (Product A + Product B) = 800 + 400 = 1,200
Activity Rate for Activity 3 = $26,000 / 1,200 = $21.67 (approximately)
So, the activity rate under the activity-based costing system for Activity 3 is closest to $21.67.
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