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 below.??Budgeted ActivityActivity Cost PoolBudgeted CostProduct AProduct BProduct CActivity 1$140,0007,5004,0006,000Activity 2$54,0002,5002,0001,500Activity 3$28,00015,00025,00030,000Compute the company's activity rates under activity-based costing for each of the three activities.
What will be an ideal response?
Activity 1: $140,000/(7,500 + 4,000 + 6,000) = $8.00
Activity 2: $54,000/(2,500 + 2,000 + 1,500) = $9.00
Activity 3: $28,000/(15,000 + 25,000 + 30,000) = $0.40
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