Agouti Legal Corp, a law firm, uses an activity-based costing in which there are
ID: 2416650 • Letter: A
Question
Agouti Legal Corp, a law firm, uses an activity-based costing in which there are three activity cost pools. The company has provided the following data concerning its costs and its activity based costing 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 On Engagements activity cost pool?
b. How much cost, in total, would be allocated to the Business Development activity cost pool?
c. How much cost, in total, would be allocated to the Other activity cost pool?
You must show your calculations.
IF YOU DO NOT SHOW YOUR CALCULATIONS I WILL MARK IT INCOMPLETE!!!!!! don't have to be a lot, just show me how you did it
Wages and salaries
$ 275,000
Travel expenses
50,000
Other expenses
125,000
Total
$ 450,000
Explanation / Answer
Activity Cost Pools
Working on Engagements
Business Development
Other
Total
Wages and salaries
=275000 * 80%
=220000
=275000 * 15%
=41250
=275000 * 5%
=13750
=275000 * 100%
=275000
Travel expenses
=50000 *75%
=37500
=50000 *20%
=10000
=50000 *5%
=2500
=50000 *100%
=50000
Other expenses
=125000 *10%
=12500
=125000 *35%
=43750
=125000 *55%
=68750
=125000 *100%
=125000
270000
95000
85000
450000
$270000 would be allocated to the Working On Engagements activity cost pool
$95000 would be allocated to the Business Development activity cost pool
$85000 would be allocated to the Other activity cost pool
Activity Cost Pools
Working on Engagements
Business Development
Other
Total
Wages and salaries
=275000 * 80%
=220000
=275000 * 15%
=41250
=275000 * 5%
=13750
=275000 * 100%
=275000
Travel expenses
=50000 *75%
=37500
=50000 *20%
=10000
=50000 *5%
=2500
=50000 *100%
=50000
Other expenses
=125000 *10%
=12500
=125000 *35%
=43750
=125000 *55%
=68750
=125000 *100%
=125000
270000
95000
85000
450000