In calculating the activity-based rate (cost driver rate), which of the following formulas is correct?
A) Total cost in activity cost pool × Total quantity of activity's cost driver
B) Total cost in activity cost pool/Total quantity of activity's cost driver
C)Total quantity of activity's cost driver × Total cost in activity cost pool
D) Total quantity of activity's cost driver/Total cost in activity cost pool

Question

Quizplus · Accepted Answer

This question requires you to determine what formula combines the correct items and correct order of operations for this formula. The formula for activity-based rate = Total cost in activity cost pool/Total quantity of activity's cost driver. Choice B is the only choice that correctly identifies the formula. Choices, A, C, and D are all incorrect as they either multiply where they should divide, or swap the numerator and denominator.

In Calculating the Activity-Based Rate (Cost Driver Rate), Which of the Following