Asked by Srishti Sharma on May 18, 2024
Verified
Eccles Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Distribution of resource consumption:
How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?
A) $316,233
B) $328,900
C) $486,200
D) $149,600
Activity-based Costing
A costing method that assigns costs to products or services based on the activities they require.
First-stage Allocation
The initial process of assigning overhead costs to different departments or cost centers in a business based on relevant criteria.
- Comprehend the initial and subsequent allocations in Activity-Based Costing.
- Understand the significance of cost pools in Activity-Based Costing and their influence on the distribution of costs.
Verified Answer
XF
Xavian FairleyMay 24, 2024
Final Answer :
B
Explanation :
To calculate the cost allocated to the Assembly activity cost pool, we need to multiply the cost driver rate for each activity by the amount of activity consumed by the pool.
For Assembly activity cost pool:
Cost driver rate = Total cost of Assembly activity / Total units of cost driver
= $558,000 / 1,500 machine-hours
= $372 per machine-hour
Activity consumption:
Assembly activity = 880 machine-hours
Cost allocated to Assembly activity cost pool = 372 x 880 = $328,900
Therefore, the correct answer is B.
For Assembly activity cost pool:
Cost driver rate = Total cost of Assembly activity / Total units of cost driver
= $558,000 / 1,500 machine-hours
= $372 per machine-hour
Activity consumption:
Assembly activity = 880 machine-hours
Cost allocated to Assembly activity cost pool = 372 x 880 = $328,900
Therefore, the correct answer is B.
Learning Objectives
- Comprehend the initial and subsequent allocations in Activity-Based Costing.
- Understand the significance of cost pools in Activity-Based Costing and their influence on the distribution of costs.
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