Calculate the activity rate of each cost-sharing activity. What is the
Similar to the above, $10000 total costs for pedals and 1,000 pedals produced would give us an activity rate equal to $10 each ($10000/1000). It’s important to remember though that these calculations do not take into account fixed costs such as overhead or other indirect expenses like materials handling which could affect the final price charged for products depending on how they are allocated across departments.
Overall then computing the activity rates is essential when it comes to accurately determining the cost of producing goods—as it provides a more detailed picture of how resources are being utilized (i.e., labor, supplies etc.) An organization can use these figures to make better decisions about how resources are being used. These figures are also useful for organizations to make more informed decisions about pricing and resource allocation.