Activity rates are determined by:
Understand the Problem
The question is asking which method is correct for determining activity rates in a budgeting context. It presents multiple-choice answers that describe different approaches based on estimated and actual costs and activity bases.
Answer
Dividing the actual cost for each activity pool by the estimated activity base.
Activity rates are determined by dividing the actual cost for each activity pool by the estimated activity base for that pool.
Answer for screen readers
Activity rates are determined by dividing the actual cost for each activity pool by the estimated activity base for that pool.
More Information
Activity rates are crucial in activity-based costing, allowing businesses to allocate costs more precisely based on actual usage or involvement.
Tips
One common mistake is mixing up actual costs with budgeted costs, leading to inaccurate activity rate calculations.
Sources
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