Cost apportionment using first stage allocation
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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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.