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

question 87

Essay

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 below.
$$\begin{array} { | l | r | r | r | r | } \hline & & { \text { Budgeted Activity } } \\\hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & { \begin{array} { l } \text { Budgeted } \\\text { Cost }\end{array} } & \text { Product A } & \text { Product B } & \text { Product C } \\\hline \text { Activity 1 } & \$ 140,000 & 7,500 & 4,000 & 6,000 \\\hline \text { Activity 2 } & \$ 54,000 & 2,500 & 2,000 & 1,500 \\\hline \text { Activity 3 } & \$ 28,000 & 15,000 & 25,000 & 30,000 \\\hline\end{array}$$
Compute the company's activity rates under activity-based costing for each of the three activities.

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Definitions:

Proxy

An authority to act on behalf of another person in voting at shareholder meetings or making other decisions.