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