Jennifer Company has two products: A and B.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: The activity rate under the activity-based costing system for Supporting customers is closest to:
A)$36.24
B)$38.44
C)$84.56
D)$115.33

Question

Jennifer Company has two products: A and B.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:  The activity rate under the activity-based costing system for Supporting customers is closest to:
A)$36.24 
B)$38.44 
C)$84.56 
D)$115.33

Quizplus · Accepted Answer

To calculate the activity rate for Supporting customers, we need to use the following formula:

Activity rate = Total cost of activity / Total activity

Total cost of Supporting customers activity = $149,800
Total activity for Supporting customers activity = 3,900

Activity rate = $149,800 / 3,900 = $38.46 (rounded to the nearest cent)

Therefore, the closest activity rate to this is choice B: $38.44. Activity rate = Estimated overhead cost ÷ Expected activity = $34,600 ÷ 900 = $38.44

Jennifer Company Has Two Products: a and B