Hagy Corporation has an activity-based costing system with three activity cost p
ID: 2522033 • Letter: H
Question
Hagy Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Data concerning the company's costs and activity-based costing system appear below:
Factory utilities (total) $ 104,000 Indirect labor (total) $ 8,000 Distribution of Resource Consumption Across Activity Cost Pools Processing Setting Up Other Factory utilities 0.10 0.60 0.30 Indirect labor 0.10 0.20 0.70 Required: Assign overhead costs to activity cost pools using activity-based costing.
Explanation / Answer
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Activity Based Costing Cost Description Total Cost Processing Setting up Other Factory Utilities(Distribution ratio 0.10:0.60:0.30) 104000 10400 62400 31200 (104000*0.1/1) (104000*0.6/1) (104000*0.3/1) Indirect Labor
(Distribution ratio 0.10:0.20:0.70) 8000 800 1600 5600 (8000*0.1/1) (8000*0.2/1) (8000*0.7/1) 112000 11200 64000 36800
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