Hagy Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Data concerning the company's costs and activity-based costing system appear below:
Distribution of Resource Consumption Across Activity Cost Pools
Required:Assign overhead costs to activity cost pools using activity-based costing.

Question

Hagy Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Data concerning the company's costs and activity-based costing system appear below:

Distribution of Resource Consumption Across Activity Cost Pools

Required:Assign overhead costs to activity cost pools using activity-based costing.

Lucas Newsome · Accepted Answer

Final Answer :

Assign overhead costs to activity cost pools by applying the percentages in the Distribution of Resource Consumption Across Activity Cost Pools table to the respective costs. For example, the first entry in the table is computed as follows: $97,000 × 0.20 = $19,400.

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