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2 May, 23:36

Nick 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:

Expected Activity

Activity Cost Pool Estimated Costs Product A Product B Total

Activity 1 $32,600 700 300 1,000Activity 2$17,600600 200 800Activity 3 $52,500 400100500

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

Answer

a. $44.65

b. $105.00

c. $525.00

d. $205.00

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Answers (1)
  1. 2 May, 23:53
    0
    b. $105.00

    Explanation:

    The computation of the activity rate under the activity-based costing system is shown below:

    For Activity 3,

    The activity rate is

    = Estimated cost : Estimated activity

    = $52,500 : 500

    = $105

    We simply divided the estimated cost by the estimated activity to get the activity rate

    All other information which is given is not considered. Hence, ignored it
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