Costs: $360,000 Selling and administrative expenses....240000 Total S600,000 Dis
ID: 2501775 • Letter: C
Question
Costs: $360,000 Selling and administrative expenses....240000 Total S600,000 Distribution of resource consumption Activity Cost Pools Customer Order Size Support Other Total 100% 20% 100% 25% 65% 20% 10% Manufacturing overhead Selling and administrative expenses The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs You have been asked to complete the first-stage allocation of costs to the activity cost pools. How much cost, in total, would be allocated in the first-stage allocation to the Order Size activity cost poo? O $150,000 O $234,000 O $360.000 O $255,000Explanation / Answer
The first stage allocation of costs to activity - Order Size cost pool is -
Manufacturing Overhead : 25% of Total cost incurred
= $360,000 * 25% = $90,000 ---- A
Selling and Administrative Expenses = 60% of Total expense incurred
= $240,000 * 60% = $144,000 ---- B
So, the total cost allocated to the first stage allocation to the Order Size activity cost pool = A + B = $234,000