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A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and cost driver activity for each of the companyâs three activity cost pools follow. Budgeted Activity of Cost Driver Activity Cost Pools Budgeted Cost Product A Product B Product C Activity 1 $ 140,000 20,000 9,000 6,000 Activity 2 $ 90,000 8,000 15,000 7,000 Activity 3 $ 82,000 1,625 1,000 2,500 Required: Compute the activity rates for each of the companyâs three activities.

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TomShelby

Answer:

Activity 1    $  4.726

Activity 2   $  3.600

Activity 3   $  5.291

Explanation:

[tex]\left[\begin{array}{cccc}&First&Second&Third\\Cost&140,000&90,000&82,000\\A&20,000&9,000&6,000\\B&80,00&15,000&7,000\\C&1,625&1,000&2,500\\Total&29,625&25,000&15,500\\\\Rate&4.726&3.600&5.291\\\end{array}\right][/tex]

The goal would be to add each activity to get the total, and then calcualte the rate:

[tex]\frac{Activity\: Cost\: Pool}{Level}= Activity\:Rate[/tex]

A 140,000/29,625

B 90,000/25,000

C 82,000/15,500

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