Khalika Company has two products: A andB. The company uses activity-based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows:$\begin{array}{lrr}
&\text { Estimated}&& \text { Expected Activity }\
\text { Activity Cost Pool }&\text { cost }&\text { ProductA}&\text { Product B}&\text { Total }\
\text {Activity 1. } &£ 16,800& 100 & 700 &800\
\text { Activity 2. } &£ 22,000 & 200 & 800 &1,00\
\text { Activity 3.} &£ 34,300 &500 &600&1,100\
\end{array}$

The activity rate under the activity-based costing system for Activity 3 is closest to

A)£31.18.
B)£25.21.
C)£57.17.
D)£66.45.

Question

Khalika Company has two products: A andB. The company uses activity-based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows:$\begin{array}{lrr}
&\text { Estimated}&& \text { Expected Activity }\
\text { Activity Cost Pool }&\text { cost }&\text { ProductA}&\text { Product B}&\text { Total }\ 
 \text {Activity 1.  } &£ 16,800& 100 & 700 &800\
 \text { Activity 2. } &£ 22,000 & 200 & 800 &1,00\
 \text {  Activity 3.} &£ 34,300 &500 &600&1,100\
\end{array}$

The activity rate under the activity-based costing system for Activity 3 is closest to

A)£31.18.
B)£25.21.
C)£57.17.
D)£66.45.

Quizplus · Accepted Answer

The activity rate for Activity 3 is calculated by dividing the estimated cost of the activity cost pool by the expected activity for the activity cost pool. In this case, the estimated cost of Activity 3 is £34,300 and the expected activity for Activity 3 is 1,100. Therefore, the activity rate for Activity 3 is £34,300 / 1,100 = £31.18.

Khalika Company Has Two Products: a AndB The Activity Rate Under the Activity-Based Costing System for Activity