Question

Mayeux 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:
Wages and salaries $320,000
Depreciation 160,000
Utilities 240,000
Total $720,000
Distribution of resource consumption:
Activity Cost Pools
Assembly Setting Up Other Total
Wages and salaries 50% 40% 10% 100%
Depreciation 10% 55% 35% 100%
Utilities 15% 50% 35% 100%
How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity cost pool?
A) $360,000.
B) $336,000.
C) $288,000.
D) $348,000.

Answer 1

Answer:

B) $336,000

Explanation:

Calculating cost to be allocated in the first-stage allocation to the Setting Up activity cost pool

                                 Setting up Amount

Wages and salaries      $128,000  [$320,000*40%]

Depreciation                 $88,000  [$160,000*55%]

Utilities                           $120,000 [$240,000*50%}

Total                               $336,000