Tomasini Corporation has provided the following data from its activity-based costing accounting system:
Supervisory wages | $ | 780,000 |
Factory supplies | $ | 380,000 |
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools | Batch Processing | Unit Processing | Other | Total | |
Supervisory wages | 30% | 60% | 10% | 100% | |
Factory supplies | 40% | 30% | 30% | 100% | |
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.
How much supervisory wages and factory supplies cost would NOT be assigned to products using the activity-based costing system?
Multiple Choice
$192,000
$780,000
$380,000
$0
Answer)
Here,my answer is $192000.
In contrast to traditional costing,in activity based costing idle time costs are treated as period costs as activity based costing products are charged only for what they have used and it is clearly mentioned in the question that idle time & organisational sustaining costs are not assigned to products.
Working:
Costs which are not considered:
In Supervisorywages:
$780000×10%=$78000
In factory supplies:
$380000×30%=$114000
Total:$114000+$78000=$192000.
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