Bossie Corporation uses an activitybased costing system with

Bossie Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:

Costs:

Wages and salaries ------------ $260,000

Depreciation -------------------    220,000

Utilities -------------------------- 140,000

Total ----------------------------- $620,000

Distribution of resource consumption:

                                       Assembly         Setting Up       Other      Total

Wages and salaries ---       50%                25%              25%      100%

Depreciation -----------      20%                30%              50%      100%

Utilities -----------------      25%                45%              30%      100%

How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?

$196,333

$209,000

$310,000

$155,000

Solution

Total Assembly Cost in the first stage allocation = $209,000

Particulars

Amount

Wages and salaries [$260,000 x 50%]

$130,000

Depreciation [$220,000 x 20%]

$44,000

Utilities [$140,000 x 25%]

$35,000

Total Cost

$209,000

Hence, The Answer is “B. $209,000”