Hunter Corp. uses activity-based costing system with three activity cost pools.

Question

Hunter Corp. uses activity-based costing system with three activity cost pools. The following information is provided:

Costs: Wages and salaries $   212,000

Depreciation                           109,000

Utilities                                    110,000

Total                                     $440,000

Activity Cost Pools

                                  Assembly    Setting Up      Other     

Wages and salaries       0.51           30%           10%     

Depreciation                  0.39           45%              20%     

Utilities                          0.21           40%              30%      

How much total cost would be allocated to the Assembly activity cost pool?

Explanation / Answer

Wages and salary allocated to Assembly = 0.51 * Wages and Salary (Total)

= 0.51 * 212,000 = 108,120

Depreciation allocated to Assembly = 0.39 * Depreciation (Total)

= 0.39 * 109,000 = 42,510

Utilities allocated to Assembly = 0.21 *Utilities (Total)

= 0.21 * 110,000 = 23,100

Total to Assembly = 108120 + 42510 + 23100 = 173,730

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