Question

Green Toys, a toy manufacturing company, is trying to allocate its indirect costs between two of its products, Mobi Cycle and Toddler Stack. The company has provided the following information regarding the activity cost pools and cost drivers.

 

Activity Cost pool	Total Activity Cost		Mobi Cycle	Toddler Stack	Total
Advertising costs	$	250,000	90	160	250	Advertisements
Designing and development costs		300,000	300	100	400	Designs
Maintenance costs		50,000	100	100	200	batches
Assembly costs		150,000	5,000	10,000	15,000	units
	$	750,000

 

Knowledge Check 01

Using the information provided, calculate the activity proportion of the Toddler Stack based on the number of designs.

 

multiple choice 1

• 50%

• 75%

• 25%

• 64%

 

Knowledge Check 02

Using the activity proportions method, determine how much of assembly costs should be allocated to the Mobi Cycle.

 

multiple choice 2

• $100,000

• $25,000

• $75,000

• $50,000

 

Knowledge Check 03

Using the activity proportions method, determine how much of the total estimated overhead was allocated to the Toddler Stack.

 

multiple choice 3

• $390,000

• $360,000

• $315,000

• $260,000