A company uses activity based costing to determine the costs of its three products: A, B and C. The budgeted cost and activity for each of the company’s three activity cost pools are shown below.
| Budgeted Activity | ||||
| Activity Cost Pool | Budgeted Cost | Product A | Product B | Product C |
| Activity 1 | $104,720 | 6,800 | 9,800 | 20,800 |
| Activity 2 | $74,520 | 7,800 | 15,800 | 8,800 |
| Activity 3 | $126,000 | 3,300 | 1,800 | 2,400 |
Which of the following statements is true regarding this company’s activity rates?
| The activity rate under the activity based costing system for Activity 2 is $2.80. | |
| The activity rate under the activity based costing system for Activity 2 is $16.80. | |
| The activity rate under the activity based costing system for Activity 2 is $2.30. | |
| The activity rate under the activity based costing system for Activity 2 is $21.90. | |
| The activity rate under the activity based costing system for Activity 2 is $3.95. |