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 ActivityActivity Cost PoolBudgeted CostProduct AProduct BProduct CActivity 1$425,0001,7006801,870Activity 2$144,9001,8901,5752,835Activity 3$85,0002,4001,0001,600Compute the company's activity rates under activity-based costing for each of the three activities.
What will be an ideal response?
Activity 1: $425,000/(1,700 + 680 + 1,870) = $100
Activity 2: $144,900/(1,890 + 1,575 + 2,835) = $23
Activity 3: $85,000/(2,400 + 1,000 + 1,600) = $17
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