Eccles 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:<\/p>\n\n\n\n
Costs:<\/p>\n\n\n\n
Wages and salaries $ 321,000
Depreciation 308,000
Utilities 145,000
Total $ 774,000
Distribution of resource consumption:<\/p>\n\n\n\n
Activity Cost Pools
Assembly Setting Up Other Total
Wages and salaries 55% 20% 25% 100%
Depreciation 20% 20% 60% 100%
Utilities 35% 60% 5% 100%
How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?<\/p>\n\n\n\n
rev: 11_09_2017_QC_CS-108764<\/p>\n\n\n\n
Garrison 16e Rechecks 2018-07-24<\/p>\n\n\n\n
Multiple Choice<\/p>\n\n\n\n
$276,233
$288,900
$425,700
$270,900<\/p>\n\n\n\n
The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n Let’s carefully analyze the problem step-by-step.<\/p>\n\n\n\n Total costs:<\/strong><\/p>\n\n\n\n Distribution of resource consumption for each activity cost pool (%):<\/strong><\/p>\n\n\n\n How much total cost<\/strong> would be allocated to the Assembly<\/strong> activity cost pool after the first-stage allocation?<\/p>\n\n\n\n We multiply each total cost by the percentage allocated to Assembly.<\/p>\n\n\n\n 321,000\u00d755%=321,000\u00d70.55=176,550321,000 \\times 55\\% = 321,000 \\times 0.55 = 176,550<\/p>\n\n\n\n 308,000\u00d720%=308,000\u00d70.20=61,600308,000 \\times 20\\% = 308,000 \\times 0.20 = 61,600<\/p>\n\n\n\n 145,000\u00d735%=145,000\u00d70.35=50,750145,000 \\times 35\\% = 145,000 \\times 0.35 = 50,750<\/p>\n\n\n\n 176,550+61,600+50,750=288,900176,550 + 61,600 + 50,750 = 288,900<\/p>\n\n\n\n $288,900<\/strong><\/p>\n\n\n\n Activity-based costing (ABC) systems allocate overhead and other indirect costs to specific activities based on resource consumption patterns. This approach improves cost accuracy by assigning costs to cost pools that reflect actual activity use rather than just using broad averages.<\/p>\n\n\n\n In this problem, Eccles Corporation uses three activity cost pools: Assembly, Setting Up, and Other. Costs such as wages and salaries, depreciation, and utilities are distributed across these pools based on the percentages given.<\/p>\n\n\n\n For each cost type, we determine the portion attributable to Assembly by multiplying the total cost by the corresponding percentage. For example, 55% of wages and salaries are consumed by Assembly activities, so 55% of the $321,000 wages and salaries cost is allocated there.<\/p>\n\n\n\n The same logic applies to depreciation and utilities. These individual allocated amounts are then summed to obtain the total cost allocated to the Assembly activity pool.<\/p>\n\n\n\n This first-stage allocation is important because it sets the stage for further cost analysis, where costs assigned to activities are then allocated to products or services based on their use of those activities.<\/p>\n\n\n\n Choosing the correct total allocation ensures accurate product costing, pricing, and decision-making in the business.<\/p>\n\n\n\n Therefore, the correct choice is:<\/strong><\/p>\n\n\n\n $288,900<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" Eccles 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 $ 321,000Depreciation 308,000Utilities 145,000Total $ 774,000Distribution of resource consumption: Activity Cost PoolsAssembly Setting Up Other TotalWages and salaries 55% 20% 25% 100%Depreciation 20% […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-215065","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/215065","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=215065"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/215065\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=215065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=215065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=215065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\n\n\nGiven:<\/h3>\n\n\n\n
Cost Type<\/th> Amount ($)<\/th><\/tr><\/thead> Wages and salaries<\/td> 321,000<\/td><\/tr> Depreciation<\/td> 308,000<\/td><\/tr> Utilities<\/td> 145,000<\/td><\/tr> Total<\/strong><\/td> 774,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
\n\n\n\nCost Type<\/th> Assembly<\/th> Setting Up<\/th> Other<\/th> Total<\/th><\/tr><\/thead> Wages and salaries<\/td> 55%<\/td> 20%<\/td> 25%<\/td> 100%<\/td><\/tr> Depreciation<\/td> 20%<\/td> 20%<\/td> 60%<\/td> 100%<\/td><\/tr> Utilities<\/td> 35%<\/td> 60%<\/td> 5%<\/td> 100%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
\n\n\n\nQuestion:<\/h3>\n\n\n\n
\n\n\n\nStep 1: Calculate the cost allocated to Assembly for each cost type<\/h3>\n\n\n\n
\n
\n
\n
\n\n\n\nStep 2: Add the allocated amounts for Assembly<\/h3>\n\n\n\n
\n\n\n\nFinal answer:<\/strong><\/h3>\n\n\n\n
\n\n\n\nExplanation:<\/h3>\n\n\n\n
\n\n\n\n