Abel Company Uses Activity-Based Costing $\quad$ $\quad$ $\quad$

question 49

Multiple Choice

Abel Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 200 units and of Product B is 400 units. There are three activity cost pools, with estimated costs and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\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 A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 16,660 & 600 & 100 & 700 \\\hline \text { Activity 2 } & 18,450 & 1,100 & 700 & 1,800 \\\hline \text { Activity 3 } & 9,731 & 60 & 160 & 220 \\\hline\end{array}$

-The predetermined overhead rate (i.e.,activity rate) for Activity 2 under the activity-based costing system is closest to which of the following?

• A) $10.25.
• B) $16.77.
• C) $24.91.
• D) $26.36.