Question

Hagy Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Data concerning the company's costs and activity-based costing system appear below:

Factory utilities (total) $ 104,000 Indirect labor (total) $ 8,000 Distribution of Resource Consumption Across Activity Cost Pools Processing Setting Up Other Factory utilities 0.10 0.60 0.30 Indirect labor 0.10 0.20 0.70 Required: Assign overhead costs to activity cost pools using activity-based costing.

Answer 1

Activity Based Costing
Cost Description	Total Cost	Processing	Setting up	Other
Factory Utilities (Distribution ratio 0.10:0.60:0.30)	104000	10400	62400	31200
		(104000*0.1/1)	(104000*0.6/1)	(104000*0.3/1)
Indirect Labor (Distribution ratio 0.10:0.20:0.70)	8000	800	1600	5600
		(8000*0.1/1)	(8000*0.2/1)	(8000*0.7/1)
	112000	11200	64000	36800