Final answer:
The cost pool allocation rate is calculated by dividing the total cost pool by the total activity driver. To compute the rate for each cost pool, determine the total cost pool and total activity driver for each activity, and use the formula to calculate the allocation rate. For example, if there are three cost pools, A, B, and C, with total cost pools of $10,000, $15,000, and $20,000, and total activity drivers of 500, 1,000, and 800 units respectively, the allocation rates would be $20 per unit, $15 per unit, and $25 per unit.
Step-by-step explanation:
The cost pool allocation rate is calculated by dividing the total cost pool by the total activity driver. The formula to compute the allocation rate is:
Allocation rate = Total cost pool / Total activity driver
To compute the rate for each cost pool, you need to determine the total cost pool for each activity and the total activity driver for each activity. Then, plug in those values into the formula to calculate the allocation rate for each cost pool.
For example, let's say there are three cost pools: A, B, and C. The total cost pool for A is $10,000 and the total activity driver for A is 500 units. The total cost pool for B is $15,000 and the total activity driver for B is 1,000 units. The total cost pool for C is $20,000 and the total activity driver for C is 800 units. Using the formula, the allocation rate for A would be $20 per unit ($10,000 / 500 units), the allocation rate for B would be $15 per unit ($15,000 / 1,000 units), and the allocation rate for C would be $25 per unit ($20,000 / 800 units).