Question

Diehl 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: Costs: Manufacturing overhead $480,000 Selling and administrative expenses 100,000 Total 580,000 Distribution of resource consumption: Activity Cost Pools Customer 85% 20% Order Size Support Other Total 10% | 100% 5% Manufacturing overhead Selling and administrative expenses 60% 096 | 100% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs You have been asked to complete the first-stage allocation of costs to the activity cost pools How much cost, in total, should NOT be allocated to orders and products in the second stage of the allocation process if the activity-based costing system is used for internal decision- making?

Answer 1

Answer:

 $84,000

Explanation:

The computation is shown below:

Particulars                      Order Size Customer support  Other Total

Manufacturing overhead   $24,000   $408,000                $48,000               480000

Selling and administrative

expenses                      $60,000 $20,000                        $20,000        $100,000

Total                              $84,000 $428,000                $68,000 $580,000

The allocation of manufacturing overhead is done in 5% 85% 10% 100%

The allocation of selling and administrative expense is done is 60% 20% 20% 100%