TB Problem Qu. 7-187 Figge and Mathews PLC, a consulting Figge and Mathews PLC,

Question

TB Problem Qu. 7-187 Figge and Mathews PLC, a consulting Figge and Mathews PLC, a consulting firm, uses an activity-based costing in which there are three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system Costs Wages and salaries Travel expenses Other expenses $480,000 180,000 240,000 $900,000 Total Distribution of resource consumption Activity Cost Pools Working On Total 100% 100% 100% Engagements Business Development Wages and salaries Travel expenses Other expenses 50% 45% 158 20% 45% 45% Other 30% 10% 40% Required: a. How much cost, in total, would be allocated to the Working On Engagements activity cost pool? b. How much cost, in total, would be allocated to the Business Development activity cost pool? c. How much cost, in total, would be allocated to the Other activity cost pool? Activity Cost Pool Total Cost a. Working On Engagements b. Business Development c. Other

Explanation / Answer

Cost Allocation ACTIVITY COST POOL TOTAL COST a. Working On Engagements 480000*0.50 + 180000*0.45 + 240000*0.15 = 357000 b. Business Development 480000*0.20+ 180000*0.45 + 240000*0.45 = 285000 c. Other 480000*0.30 + 180000*0.10 + 240000*0.40= 258000

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