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

question 32

Essay

A company uses activity-based costing to determine the costs of its three products: A, B and C.The activity rates and activity levels for each of the company's three activity cost pools are shown in the following table:
$\begin{array}{r}{\text { Budgeted Activity }} \quad \quad \quad \quad \quad \quad \\\begin{array}{|l|r|r|r|r|}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Activity Rate } & \text { Product A } & \text { Product B } & \text { Product C } \\\hline \text { Activity 1 } & \$ 48 & 3,500 & 1,000 & 500 \\\hline \text { Activity 2 } & \$ 51 & 300 & 2,100 & 600 \\\hline \text { Activity 3 } & \$ 73 & 400 & 200 & 1,400\\\hline\end{array}\end{array}$ Compute the company's budgeted overhead cost for each of the three products under activity-based costing.

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Definitions:

Ovals

Simple, elongated round shapes that can be geometric forms in design or natural formations.

Ratio

A quantitative relation between two amounts showing the number of times one value contains or is contained within the other.

Negative Correlation

A relationship between two variables in which one variable increases as the other decreases, and vice versa.

Opposite Directions

Refers to two or more entities, trends, or forces moving in contrary paths or exhibiting contrary behavior in a given context.