Question

QUESTION 2 Youth Corporation has an activity-based costing system with three activity cost pools-Processing, Setting Up, and Other. The company's overhead costs consist of equipment depreciation and indirect labor and are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Equipment depreciation totals $72,000 and indirect labor totals $8,000. Data concerning the distribution of resource consumption across activity cost pools appear below: Equipment depreciation........... Indirect labor Processing 0.20 0.20 Setting Up 0.40 0.30 Other 0.40 0.50 Required: Assign overhead costs to activity cost pools using activity-based costing.

Answer 1

Answer

	Processing	Setting Up	Other	TOTAL
Equipment Depreciation	$14,400	$28,800	$28,800	$72,000
Indirect Labor	$1,600	$2,400	$4,000	$8,000

--Workings

	Processing	Setting Up	Other	TOTAL
Equipment Depreciation	=72000*0.2	=72000*0.4	=72000*0.4	=14400+28800+28800
Indirect Labor	=8000*0.2	=8000*0.3	=8000*0.5	=1600+2400+4000