Using the following information, determine the activity rate for the purchasing activity. Activity Estimated Activity Cost Estimated Activity-Base Usage Setup $80,000 1,000 Purchasing 130,000 10,000 Inspecting 50,000 2,000 a.$2.00 b.$8.00 c.$130.00 d.$13.00
Using the following information, determine the activity rate for the purchasing activity. Activity Estimated Activity Cost Estimated Activity-Base Usage Setup $80,000 1,000 Purchasing 130,000 10,000 Inspecting 50,000 2,000 a.$2.00 b.$8.00 c.$130.00 d.$13.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Using the following information, determine the activity rate for the purchasing activity.
Activity | Estimated Activity Cost | Estimated Activity-Base Usage |
Setup | $80,000 | 1,000 |
Purchasing | 130,000 | 10,000 |
Inspecting | 50,000 | 2,000 |
a.$2.00
b.$8.00
c.$130.00
d.$13.00
Expert Solution
Introduction:
Under activity based costing, cost are calculated for each activity based on their consumption or usage. The activity rate is based on the activity base of that activity.
The question requires the activity rate for the purchasing activity.
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