The \"Other\" activity cost pool consists of the costs of idle capacity and orga
ID: 2604963 • Letter: T
Question
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.
How much indirect factory wages and factory equipment depreciation cost would NOT be assigned to products using the activity-based costing system?
$577,000
$346,000
$109,600
$0
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.
How much indirect factory wages and factory equipment depreciation cost would be assigned to the Customer Orders activity cost pool?
$422,400
$565,400
$389,900
$839,000
Lehner Corporation has provided the following data from its activity-based costing accounting system:Explanation / Answer
Answer
Calculation of allocation of overheads
Cost to be assigned
Cost not to be assigned
Cost
Amount
Customer Orders
Product Processing
Other
Total
Indirect Factory Wages
577000
[35%] 201950
[55%] 317350
[10%] 57700
[100%] 577000
Factory Equipment depreciation
346000
[30%] 103800
[55%] 190300
[15%] 51900
[100%] 346000
Since, ‘other’ allocated cost is not to be assigned and its total is asked in the question, The CORRECT ANSWER will be 57700 + 51900 = $ 109,600 [OPTION – C]
Cost to be assigned
Cost not to be assigned
Cost
Amount
Customer Orders
Product Processing
Other
Total
Indirect Factory Wages
569000
[60%] 341400
[25%] 142250
[15%] 85350
[100%] 569000
Factory Equipment depreciation
270000
[30%] 81000
[45%] 121500
[25%] 67500
[100%] 270000
Question’s requirement is regarding total cost allocated to Customer Order activity cost pool, and the answer will e 341400 + 81000 = $422,400 which is OPTION - A
Cost to be assigned
Cost not to be assigned
Cost
Amount
Customer Orders
Product Processing
Other
Total
Indirect Factory Wages
577000
[35%] 201950
[55%] 317350
[10%] 57700
[100%] 577000
Factory Equipment depreciation
346000
[30%] 103800
[55%] 190300
[15%] 51900
[100%] 346000
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