3-4. Miller Corporation uses an activity-based costing system with the following three activity cost pools:
Activity Cost: Total Activity
Fabrication 40,000 hours
Order Processing 500 orders
The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs.
The company has provided the following data concerning its costs:
Wages and Salaries $420,000
Depreciation $100,000
Occupancy $120,000
Total $640,000
The distribution of resource consumption across activity cost pools is given below:
Fabrication Order Processing Other Total
Wages and Salaries 5% 80% 15% 100%
Depreciation 15% 45% 40% 100%
Occupancy 25% 50% 25% 100%
3. The total cost allocation to the Fabrication activity cost pool is:
A. $640,000
B. $100,000
C. $66,000
D. $30,000
4. The total cost allocation to the Order Processing activity cost pool is:
A. $441,000
B. $100,000
C. $640,000
D. $420,000
3-4. Miller Corporation uses an activity-based costing system with the following three activity cost pools:
Activity Cost: Total Activity
Fabrication 40,000 hours
Order Processing 500 orders
The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs.
The company has provided the following data concerning its costs:
Wages and Salaries $420,000
Depreciation $100,000
Occupancy $120,000
Total $640,000
The distribution of resource consumption across activity cost pools is given below:
Fabrication Order Processing Other Total
Wages and Salaries 5% 80% 15% 100%
Depreciation 15% 45% 40% 100%
Occupancy 25% 50% 25% 100%
3. The total cost allocation to the Fabrication activity cost pool is:
A. $640,000
B. $100,000
C. $66,000
D. $30,000
4. The total cost allocation to the Order Processing activity cost pool is:
A. $441,000
B. $100,000
C. $640,000
D. $420,000
Related questions
SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system:
| Driver and guard wages | $ | 920,000 |
| Vehicle operating expense | 350,000 | |
| Vehicle depreciation | 230,000 | |
| Customer representative salaries and expenses | 260,000 | |
| Office expenses | 120,000 | |
| Administrative expenses | 420,000 | |
| Total cost | $ | 2,300,000 |
The distribution of resource consumption across the activity cost pools is as follows:
| Travel | Pickup and Delivery | Customer Service | Other | Totals | ||||||
| Driver and guard wages | 50 | % | 35 | % | 10 | % | 5 | % | 100 | % |
| Vehicle operating expense | 70 | % | 5 | % | 0 | % | 25 | % | 100 | % |
| Vehicle depreciation | 60 | % | 15 | % | 0 | % | 25 | % | 100 | % |
| Customer representative salaries and expenses | 0 | % | 0 | % | 90 | % | 10 | % | 100 | % |
| Office expenses | 0 | % | 20 | % | 30 | % | 50 | % | 100 | % |
| Administrative expenses | 0 | % | 5 | % | 60 | % | 35 | % | 100 | % |
Required:
Complete the first stage allocations of costs to activity cost pools.
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Agouti Legal Corp, a law firm, uses an activity-based costing inwhich there are three activity cost pools. The company has providedthe following data concerning its costs and its activity basedcosting system:
Costs:
Wages and salaries | $ 275,000 |
Travel expenses | 50,000 |
Other expenses | 125,000 |
Total | $ 450,000 |
Distribution of resource consumption:
Activity Cost Pools | ||||
Working on | Business | |||
Engagements | Development | Other | Total | |
Wages and salaries | 80% | 15% | 5% | 100% |
Travel expenses | 75% | 20% | 5% | 100% |
Other expenses | 10% | 35% | 55% | 100% |
Required:
a. How much cost, in total, would be allocated to the Working OnEngagements activity cost pool?
b. How much cost, in total, would be allocated to the BusinessDevelopment activity cost pool?
c. How much cost, in total, would be allocated to the Otheractivity cost pool?
You must show your calculations.
