Capizzi Corporation has an activity-based costing system with three activity cos

Question

Capizzi Corporation has an activity-based costing system with three activity cost pools-Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

Caplzzi Corporation has an activity-based costing system with three activity cost pools-Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs Equipment depreclation Supervisory expense $3,700 Distribution of Resource Consumption Across Activity Cost Pools Activity Cost Pools Machinln 0.60 0.60 0.30 0.20 Other 0.10 0.20 Equipment depreclation Supervisory expense Machining costs are assigned to products using machlne-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow Activity Orders 1380 1,620 3,000 MHs (Machining) Product Y7 Product V2 Total 1,360 9,720 11,080 How much overhead cost is allocated to the Order Flling activity cost pool under actlivity-based costing? O $740 O $24,980 O $71,980 O $24.240

Explanation / Answer

                          Order filing

Depreciation          30 %           i.e 80800*30% = $24240

Supervisory           20 %            i.e 3700*20% = $ 740

Total allocation to order filing = 24240 +740

= $ 24980

Option B is correct.

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