Question

Hosley Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs: Costs: Wages and salaries $ 360,000 Depreciation 100,000 Utilities 120,000 Total $ 580,000 The distribution of resource consumption across the three activity cost pools is given below: Activity Cost Pools ​ Assembly Setting Up Other Total Wages and salaries 50% 40% 10% 100% Depreciation 10% 45% 45% 100% Utilities 5% 60% 35% 100% How much cost, in total, would be allocated in the first-stage allocation to the Other activity cost pool? Question 5 options: A) $203,000 B) $174,000 C) $58,000 D) $123,000

Answer 1

Answer:

D) $123,000

Explanation:

Total Costs provided, based on activity based costing,

Wages and salaries =  $360,000

Depreciation = $100,000

Utilities = $120,000

Other activity cost pool sharing for the above 3 activities

Wages and salaries = 10% = $360,000 $\times$ 10% = $36,000

Depreciation = 45% = $100,000 $\times$ 45% = $45,000

Utilities = 35% = $120,000 $\times$ 35% = $42,000

Total of other activities = $36,000 + $45,000 + $42,000 = $123,000

Final Answer

D) $123,000