Homework Sourse34 Miller Corporation uses an activitybased costing system w
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
Solution
3. Cost Allocation to Fabrication Wages and salaries 21000 =420000*5% Depreciation 15000 =100000*15% Occupancy 30000 =120000*25% Total 66000 Hence Option C is Correct 4. Cost Allocation to Order Processing Wages and salaries 336000 =420000*80% Depreciation 45000 =100000*45% Occupancy 60000 =120000*50% Total 441000 Hence Option A is Correct
