Lysiak Corporation uses an activity based costing system to assign overhead cost

Question

Lysiak Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment depreciation and supervisory expense-are allocated to three activity cost pools-Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation $47,000 Supervisory expense $ 6,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Equipment depreciation Supervisory expense 0.60 0.60 0.10 0.20 Other 0.30 0.20 In the second stage, Machining costs are assigned to products using machine-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

Explanation / Answer

Calculate cost allocated to machining cost pool :

$31800 overhead cost is allocated to the machining activity cost pool under activity based costing in the first stage of allocation.

Machining Equipment depreciation (47000*60%) 28200 Supervisory expenses (6000*60%) 3600 Total machining cost 31800

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