Bossie Corporation uses an activity-based costing system with three activity cos
ID: 2399524 • Letter: B
Question
Bossie Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:
Costs:
Wages and salaries ------------ $260,000
Depreciation ------------------- 220,000
Utilities -------------------------- 140,000
Total ----------------------------- $620,000
Distribution of resource consumption:
Assembly Setting Up Other Total
Wages and salaries --- 50% 25% 25% 100%
Depreciation ----------- 20% 30% 50% 100%
Utilities ----------------- 25% 45% 30% 100%
How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?
$196,333
$209,000
$310,000
$155,000
a.$196,333
b.$209,000
c.$310,000
d.$155,000
Explanation / Answer
Total Assembly Cost in the first stage allocation = $209,000
Particulars
Amount
Wages and salaries [$260,000 x 50%]
$130,000
Depreciation [$220,000 x 20%]
$44,000
Utilities [$140,000 x 25%]
$35,000
Total Cost
$209,000
Hence, The Answer is “B. $209,000”
Particulars
Amount
Wages and salaries [$260,000 x 50%]
$130,000
Depreciation [$220,000 x 20%]
$44,000
Utilities [$140,000 x 25%]
$35,000
Total Cost
$209,000
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