The formula to calculate the Activity Rate is:
\[ ACR = \frac{CP}{CD} \]
Where:
Activity rate is a measure used in activity-based costing to allocate overhead costs to specific activities or cost objects. It is calculated by dividing the total cost pool by the cost driver. This rate helps in determining the cost per unit of activity, which can be used for more accurate costing and pricing decisions.
Let's assume the following values:
Using the formula:
\[ ACR = \frac{50,000}{10,000} = 5 \text{ dollars/unit} \]
The Activity Rate (ACR) is $5 per unit.
