Question
XYZ Co has an activity-based costing system with three activity cost pools--Fixing, Cutting, and Other. In the first stage allocations, costs in the two
XYZ Co has an activity-based costing system with three activity cost pools--Fixing, Cutting, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and factory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs: Factory depreciation Indirect labor $79,600 $5,000 Distribution of Resource Consumption Across Activity Cost Pools: Equipment depreciation Factory expense Activity Cost Pools Fixing Cutting Other 0.30 0.50 0.20 0.50 0.30 0.20 Fixing costs are assigned to products using machine-hours (MHS) and Cutting costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:
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