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$70,000 6,000 9,000 20,000 Activity 2$45,000 7,000 15,000 8,000 Activity 3$82,000 2,500 1,000 1,625 Which of the following statements is true regarding this company's activity rates?
A. The activity rate under the activity-based costing system for Activity 2 is $2.00.
B. The activity rate under the activity-based costing system for Activity 2 is $16.00.
C. The activity rate under the activity-based costing system for Activity 2 is $1.50.
D. The activity rate under the activity-based costing system for Activity 2 is $2.81.
E. The activity rate under the activity-based costing system for Activity 2 is $19.50.
Answer: C
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