In activity-based costing, each major activity has its own overhead cost pool, its own activity measure,...

In activity-based costing, each major activity has its own overhead cost pool, its own activity measure, and its own overhead rate.

True or False

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Expert Solution

Answer --- True

In activity based costing overhead cost is divided into various activities and every activity cost is divided amongst products at their own rate. These rates are calculated by dividing activity cost by level of activity.

Given below is a schedule showing calculations of various activity rates according to their activity level.

Activity	Cost Drivers	Total Activity Amount (A)	Level of Activity (B)	Activity Rate (C=A/B)

Setting up machines	Number of Setups	$ 515,451.00	1000.00	$ 515.45	Per setup
Assembling	Number of labor hours	$ 951,140.00	80000.00	$ 11.89	Per Labor hour
Inspection	Number of Inspections	$ 105,144.00	1200.00	$ 87.62	Per Inspection
		$ 1,571,735.00

ekkarill92 answered 1 year ago

In activity-based costing, the activity rate for an activity cost pool is computed by dividing...

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