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 depreciation020 Indirect labor Processing Setting Upother 0.40 0.50 0.40 Required: Assign overhead costs to activity cost pools using activity-based costing.

Answer 1

	i	ii	iii		iv		v=iv*i	vi=iv*ii	vii=iv*iii
	cost pool						Allocation of overhead cost
	Processing	Setting up	Other		Total cost		Processing	Setting up	Other
Equipment depreciation	0.2	0.4	0.4		72000		14400	28800	28800
Indirect labor	0.2	0.3	0.5		8000		1600	2400	4000