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Which of statements is true regarding company activity rates

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Reference no: EM132967750

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:

Budgeted Activity 
Activity Cost Pool               Budgeted Cost              Product A            Product B               Product C
Activity 1                              $87,000                       7,700             10,700                 21,700
Activity 2                              $62,000                       8,700                16,700                  9,700
Activity 3                             $116,000                      4,200                2,700                      3,325
 
Problem 1: Which of the following statements is true regarding this company's activity rates?

Multiple Choice

Option 1: The activity rate under the activity-based costing system for Activity 2 is $2.17.
Option 2: The activity rate under the activity-based costing system for Activity 2 is $11.34.
Option 3: The activity rate under the activity-based costing system for Activity 2 is $1.77.
Option 4: The activity rate under the activity-based costing system for Activity 2 is $15.28.
Option 5: The activity rate under the activity-based costing system for Activity 2 is $3.50.

Reference no: EM132967750

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