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

Question

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

Costs: Wages and salaries $   209,000

Depreciation                           113,000

Utilities                                    114,000

Total                                     $440,000

Activity Cost Pools

                                  Assembly    Setting Up      Other     

Wages and salaries       0.57           30%           10%     

Depreciation                  0.37           45%              20%     

Utilities                          0.21           40%              30%      

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

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Total Cost Allocated to Assembly = Wages and Salaries*% Allocated to Assembly + Depreciation*% Allocated to Assembly + Utilities*% Allocated to Assembly = 209000*57% + 113000*37% + 114000*21% = 184880

Answer is $184880.

Thanks.

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