Asked by Rachel Romero on May 02, 2024
Verified
In activity-based costing, a separate activity rate (i.e., predetermined overhead rate)is computed for each activity cost pool by dividing the estimated overhead cost in the activity cost pool by the total expected activity for the activity cost pool.
Activity Cost Pool
A grouping of all the costs related to a particular activity in the activity-based costing method.
Activity Rate
An overhead rate in activity-based costing. Each activity cost pool has its own activity rate which is used to assign overhead to products and services.
- Gain an understanding of the function and relevance of an activity measure in the apportionment of overhead costs within activity-based costing.
Verified Answer
MM
Madison MenicucciMay 03, 2024
Final Answer :
True
Explanation :
This statement is correct. An activity rate is calculated for each activity cost pool by dividing the total estimated overhead cost in the pool by the total expected activity in that cost pool. This helps to assign overhead costs more accurately to products or services based on the activities they require.
Learning Objectives
- Gain an understanding of the function and relevance of an activity measure in the apportionment of overhead costs within activity-based costing.
Related questions
An Activity Cost Pool in Activity-Based Costing Is a Cost ...
The More Activities Tracked by Activity-Based Costing,the More Accurately Overhead ...
ABC Can Be Used to Assign Costs to Any Cost ...
A ________ Is a Collection of Costs That Are Related ...
Activity Rates Are Computed by Dividing the Cost Budgeted for ...