A Company Uses Activity-Based Costing to Determine the Costs of Its

question 11

Multiple Choice

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: What are the activity rates for the three activities under activity-based costing?

• A) (1) $2.00; (2) $3.00; (3) $3.50.
• B) (1) $3.50; (2) $1.50; (3) $32,80.
• C) (1) $3.50; (2) $3.00; (3) $16.00.
• D) (1) $2.00; (2) $1.50; (3) $16.00.
• E) (1) $2.00; (2) $1.50; (3) $32.80.

---

Definitions:

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, often used for managing liquidity and ensuring a company can meet its short-term obligations.

Budgeted Monthly Sales

An estimation of the sales revenue that a business expects to achieve in a particular month.

Other Payments

Refers to miscellaneous or additional payments that are outside the regular or expected transactions.

Cash Conversion Cycle

An index quantifying the period a business needs to turn its investments in inventory and other assets into cash flows generated through sales.