In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by:

the total activity for the activity cost pool.

Explanation:

In Accounting, costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.

Generally, an activity-based costing uses multiple cost pools such as manufacturing cost or customer services and multiple cost drivers such as direct labor hours worked, number of changes used in engineering department, etc.

Cost pool is simply the amount of money spent by a firm on a particular activity.

In activity-based costing, the activity rate for an activity cost pool is computed as;

Activity rate = total overhead cost/activity for the activity cost pool.

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