The Activity Rate for Each Cost Pool

question 116

Multiple Choice

The activity rate for each cost pool

• A)Is computed as Total activity driver volume/Total activity cost pool resources.
• B)Is similar to the predetermined overhead rate calculation under traditional job order costing.
• C)Is computed as part of the last step in the preparation of activity-based costing data.
• D)All of these ans choices are correct.

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Definitions:

Special Cause Variation

Variation in a process that is caused by specific circumstance, which is non-random and can usually be identified and eliminated.

Random Variation

The unpredictability in the outcome of a process, experiment, or measurement due to chance.

Lower Control Limit

The lower control limit is the lowest value on a control chart below which process variability is considered to be out of control.

Sample Proportion

A statistic that estimates the fraction of items in a population that possess a certain attribute, based on data from a sample.