Jennifer Company has two products: A and B. The company uses activity based cost

Question

Jennifer Company has two products: A and B. The company uses activity based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows: Estimated Overhead Expected Activity Activity Cost Pools Product design Assembling Supporting customers Cost Product A Product B Total 23, 500 400 s 18,000 500 S 34,600 600 100 200 300 500 700 900 The activity rate under the activity-based costing system for Supporting customers is closest to Multiple Choice $36.24 $38.44 $84.56 $115.33

Explanation / Answer

Total Supporting Cost = $ 34,600

Total Activity = 900

Hence Activity Rate for Supporting Customers = Total Supporting Cost / Total Activity

= $ 34,600 / 900

= $ 38.44

Hence the correct answer is $ 38.44

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