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 $ 213,000

Depreciation 101,000

Utilities 118,000

Total $440,000

Activity Cost Pools

Assembly Setting Up Other

Wages and salaries      0.53             30%            10%

Depreciation                  0.33             45%            20%

Utilities                            0.20             40%            30%

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

Explanation / Answer

Cost allocated = (.53*213,000) + (0.33*101,000) + (0.20*118,000) = $234,220

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