Distinguish between Cost drivers and Cost pool. Understand the concept of Activity Based Costing.The costs in the Other activity cost pool are not assigned to products.After going through this module, you will be able to: Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. Data used in the first stage allocations follow:ĭistribution of Resource Consumption Across Activity Cost Pools:Īctivity Cost Pools Processing Supervising Other In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. The answer is C.Īddleman Corporation has an activity-based costing system with three activity cost pools - Processing, Supervising, and Other. Therefore, the product margin for Product W1 under activity-based costing is $7,984. Using the given data, we can calculate the following: Next, we need to assign the Machining and Order Filling costs to the products using the given activity data. Total overhead cost allocated to Order Filling = $18,400 + $800 = $19,200 Data to performįirst, we need to allocate the overhead costs to the activity cost pools based on resource consumption. Supervisory expense-to three activity cost pools-Machining, Orderįilling, and Other-based on resource consumption. What is the product margin for Product W1 under activity-basedĭoede Corporation uses activity-based costing to compute productĪllocates two overhead accounts-equipment depreciation and The costs in the OtherĪctivity cost pool are not assigned to products.įinally, sales and direct cost data are combined with MachiningĪnd Order Filling costs to determine product margins. Using machine-hours (MHs) and Order Filling costs are assigned to In the second stage, Machining costs are assigned to products Data to performĭistribution of Resource Consumption Across Activity Cost Supervisory expense–to three activity cost pools–Machining, Orderįilling, and Other–based on resource consumption. In the first stage, the activity-based costing systemĪllocates two overhead accounts–equipment depreciation and SOLVED: Doede Corporation uses activity-based costing to compute product
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