Maxx Inc. has provided the following data from its activity-based costing system
ID: 2498120 • Letter: M
Question
Maxx Inc. has provided the following data from its activity-based costing system: Activity Cost Pools Total Cost Total Activity Designing products $379,000 6,330 product design hrs Setting up batches $52,678 7366 batch set-ups Assembling products $25,122 4,018 assembly hours The activity rate for the designing products activity cost pool is:
B.
Sasha Company allocates the estimated $198600 of its accounting departments costs to its production and sales departments since the accounting department supports the other two departments particularly with regard to payroll and accounts payable functions. The costs will be allocated on the number of employees using the direct method. Information regarding costs and employees follows:
Department Employees
Accounting 4
Production 34
Sales 13
How much of the accounting department costs will be allocated to the production?
Explanation / Answer
Calculation of the activity rate Cost Units Per Activity driver Design 379000 6330 59.87362 Setting Up 52678 7366 7.151507 Assembling 25122 4018 6.252364 Activity Rate 73.27749 Accounting department cost 198600*4/51 15576.47 Accounting Department cost is $ 15576.47