Sarah Company Has Two Products: T and V $\quad$ $\quad$

question 105

Multiple Choice

Sarah Company has two products: T and V. The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product T } & \text { Product V } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 39,000 & 400 & 900 & 1,300 \\\hline \text { Activity 3 } & 80,000 & 400 & 3,600 & 4,000 \\\hline\end{array}$ The annual production and sales of Product T is 10,640 units. The annual production and sales of Product V is 26,600.


-The activity rate under the activity-based costing system for Activity 2 is closest to which of the following?

• A) $16.00.
• B) $21.97.
• C) $26.67.
• D) $30.00.

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Definitions:

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