Question

19. Geneva Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs: Costs: Wages and salaries ...... Depreciation Occupancy Total $240,000 160,000 140.000 $540,000 The distribution of resource consumption across the three activity cost pools is given below: Activity Cost Pools Order Processing Fabricating 30% 20% Other 25% Total 100% 45% Wages and salaries...... Depreciation.... Occupancy 35% 100% 65% 30% 100% How much cost, in total, would be allocated in the first stage allocation to the other activity cost pool? A. $135,000 C. $162,000 B. $174,000 D. $180,000

Answer 1

Calculation of cost allocated to other activity cost pool

Cost	Amount	Proportion	Allocation cost
Wages and salary	240,000	25%	240,000 x 25% = 60,000
Depreciation	160,000	45%	160,000 x 45% = 72,000
Occupancy	140,000	30%	140,000 x 30% = 42,000
Total cost			$174,000

Total allocation cost in the first stage allocation to other activity cost pool = $174,000

Correct option is (B)

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