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Activity rate

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Abrams Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 300 units and of Product B is 1,000 units. There are three activity cost pools, with estimated costs and expected activity as follows:

Expected Activity
Activity Cost Pool Estimated Cost Product A Product B Total
Activity 1 7,356 200 200 400
Activity 2 30,555 1,400 700 2,100
Activity 3 16,169 90 300 390

Reference: 8-13

The activity rate for Activity 3 is closest to:

18.71
53.906
138.67
41.46

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Solution Summary

This provides the steps to compute the activity rate

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