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    Cost apportionment using first stage allocation

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    Duerr Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs:

    Wages and salaries $400,000
    Depreciation 180,000
    Occupancy 200,000
    Total $780,000

    The distribution of resource consumption across the three activity cost pools is given below:
    Activity Cost Pools
    Fabricating Order Processing Other Total
    Wages and salaries 55% 20% 25% 100%
    Depreciation 10% 50% 40% 100%
    Occupancy 35% 40% 25% 100%

    How much cost, in total, would be allocated in the first-stage allocation to the Order Processing activity cost pool?

    A) $250,000
    B) $286,000
    C) $156,000
    D) $312,000

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    The problem is a multiple choice question on cost ...

    Solution Summary

    The problem deals with apportioning order processing costs at the first stage of allocation.

    The first stage of allocation is the stage at which costs, in a company's cost centre, are first distributed to the respective units.