Question

A manufacturing company 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 5800,000 120,000 Occupancy 300,000 $1,220,000 Total The distribution of resource consumption across the three activity cost pools is given below: Activity Cost Pools Order Fabricating Processing Other Total Wages and salaries 60% 30% 10% 5% Depreciation 75% 20% 100% 100% 100% Occupancy 80% 10% 10% How much cost, in total, would be allocated in the first-stage allocation to the Fabricating cost pool? $732,000 $406,667 $976,000 $810,000

Answer 1

1 First Stage allocation: 3 Wages and salaries 4 Depreciation 5 Occupancy 6 Total allocated cost Fabricating Processing Other $ 480,000 $ 240,000 $ 80,000 $ 90,000 $ 24,000$ 6,000 $ 240,000$ 30,000$ 30,000 $ 810,000$ 294,000$ 116,000 8 Hence, the correct option is $810,000.

1 First Stage allocation: 2 3 Wages and salaries 4 Depreciation 5 Occupancy 6 Total allocated cost Fabricating Processing Other =800000*0.6 |=800000*0.3 =800000*0.1 = 120000*0.75 = 120000*0.2=120000*0.05 =300000*0.8 +300000*0.1 =300000*0.1 =+B3+B4+B5 =+C3+04+C5 =+D3+04+05 8 Hence, the correct option is $810,000.