Question

Lakatos 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 $ 420,000 Depreciation 240,000 Occupancy 220,000 Total $ 880,000 The distribution of resource consumption across the three activity cost pools is given below: Activity Cost Pools Total Fabricating Order Processing Other Wages and salaries 10% 75% 15% 100% Depreciation 5% 50% 45% 100% Utilities 30% 35% 35% 100% How much cost, in total, would be allocated in the first-stage allocation to the Fabricating activity cost pool

Answer 1

Answer: $120,000

Explanation:

The cost, that would be allocated in the first-stage allocation to the Fabricating activity cost pool will be:

Wages and salaries = 10% × $420,000 = $42000

Depreciation = 5% × $240000 = $12000

Occupancy = 30% × $220,000 = $66,000

Therefore, the fabricating cost will be:

= $42000 + $12000 + $66000

= $120,000