Asked by laura garcia on May 02, 2024
Verified
In activity-based costing, the total activity in an activity cost pool can be computed by:
A) dividing the total overhead cost in the activity cost pool by the activity cost pool's activity rate.
B) multiplying the total overhead cost in the activity cost pool by the activity cost pool's activity rate.
C) dividing the activity cost pool's activity rate by the direct labor-hours required to make a product.
D) multiplying the activity cost pool's activity rate by the direct labor-hours required to make a product.
Total Activity
The measure of the total amount of work or production completed in a specific period.
Activity Cost Pool
A collection of costs grouped together based on similar cost drivers or activities, used in activity-based costing to allocate costs more accurately.
Activity Rate
A measure used in cost accounting to allocate overhead costs to products or services based on specific activities or processes.
- Understand the calculation and allocation of activity rates within the framework of activity-based costing.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
A
Explanation :
The total activity in an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by the activity cost pool's activity rate. This gives the amount of activity that has been allocated the overhead cost.
Learning Objectives
- Understand the calculation and allocation of activity rates within the framework of activity-based costing.