1. The first-stage allocation of costs to activity cost pools appears below:
Distribution of Resource Consumption
Across Activity Cost Pools
Cleaning
Carpets Travel
to Jobs Job
Support Other Total
Wages ... 70% 20% 0% 10% 100%
Cleaning supplies ... 100% 0% 0% 0% 100%
Cleaning equipment depreciation... 80% 0% 0% 20% 100%
Vehicle expenses ... 0% 60% 0% 40% 100%
Office expenses ... 0% 0% 45% 55% 100%
President’s compensation ... 0% 0% 40% 60% 100%
Carpets Travel
to Jobs Job
Support Other Total
Wages... $105,000 $30,000 $ 0 $ 15,000 $150,000
Cleaning supplies ... 40,000 0 0 0 40,000
Cleaning equipment depreciation.... 16,000 0 0 4,000 20,000
Vehicle expenses... 0 48,000 0 32,000 80,000
Office expenses ... 0 0 27,000 33,000 60,000
President’s compensation... 0 0 32,000 48,000 80,000
Total cost ... $161,000 $78,000 $59,000 $132,000 $430,000
Example: 70% of $150,000 = $105,000
Other entries in the table are determined in a similar manner.
Problem 8-25 (continued)
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