Question:
Laguna Corporation has provided the following data concerning its overhead costs for the coming year:
|
Wages and salaries
|
$260,000
|
|
Depreciation
|
100,000
|
|
Rent .
|
180,000
|
|
Total
|
$540,000
|
The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year:
|
Activity Cost Pool
|
Total Activity
|
|
Assembly
|
50,000 labor-hours
|
|
Order processing
|
400 orders
|
|
Other
|
Not applicable
|
The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization-sustaining costs.
The distribution of resource consumption across activity cost pools is given below:
|
|
Activity Cost Pools
|
|
|
Assembly
|
Order Processing
|
Other
|
Total
|
|
Wages and salaries
|
60%
|
20%
|
20%
|
100%
|
|
Depreciation
|
5%
|
60%
|
35%
|
100%
|
|
Rent
|
30%
|
30%
|
40%
|
100%
|