Question & Answer: Abagail Corp. uses activity-based costing system with three activity cost pools……

Abagail Corp. uses activity-based costing system with three activity cost pools.

The following information is provided:

Costs:Wages and salaries $ 201,000

Depreciation 112,000

Utilities 119,000

Total $440,000

Activity Cost Pools

Assembly                        Setting Up       Other

Wages and salaries       0.53                                30%                 10%

Depreciation                0.30                                  45%                20%

Utilities                          0.28                                40%                 30%

How much total cost would be allocated to the Assembly activity cost pool?

Expert Answer

 

Total cost woule be allocated Assembly activity cost pool

= ({WA}*{WS})+({DA}*{D})+({UA}*{U})

= 0.53 x $201,000 + 0.30 x $112,000 + 0.28 x $ 119,000

= $173,450

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