A manufacturing company uses an activity-based costing system with three activit
ID: 2394775 • Letter: A
Question
A manufacturing company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs:
Costs:
Wages and salaries
$400,000
Depreciation
40,000
Occupancy
120,000
Total
$560,000
The distribution of resource consumption across the three activity cost pools is given below:
Activity Cost Pools
Order
Fabricating
Processing
Other
Total
Wages and salaries
80%
15%
5%
100%
Depreciation
70%
25%
5%
100%
Occupancy
40%
50%
10%
100%
How much cost, in total, would be allocated in the first-stage allocation to the Other cost pool?
Costs:
Wages and salaries
$400,000
Depreciation
40,000
Occupancy
120,000
Total
$560,000
Explanation / Answer
Total Other Cost:
Wages and salaries: 5% × $400,000 $20,000 Depreciation: 5% × $40,000 $2,000 Occupancy: 10% × $120,000 $12,000 Total $34,000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.