An activity based costing system is used at GCO Plc Ltd. to assign products overhead costs. First, t
An activity based costing system is used at GCO Plc Ltd. to assign products overhead costs. First, the two overhead costs of Building Maintenance expense and Equipment depreciation are allocated to three activity cost pools – Finishing, Order Filling, and Other – based on resource consumption. The information used to perform these allocations is below:Overhead Costs:Building Maintenance expense: $100,000Equipment depreciation: $175,000Distribution of Resource Consumption across Activity Cost Pools:Overhead CostActivity Cost PoolsFinishingOrder FillingOtherBuilding Maintenance expense0.220.260.52Equipment depreciation0.480.440.08The second stage of allocation is done by assigning the Finishing costs to products on the basis of direct labor hours while products are assigned Order Filling costs based on orders filled. Costs assigned to the Other activity pool are not further assigned to products. Activity information for GCO’s only two products is below:direct labor hoursorders filledProduct LS-172:5,0001,700Product LS-137:2,2002,600Total:7,2004,300PART A:How much overhead cost is assigned to the Finishing activity cost pool under activity based costing in the first stage of allocation?AnswerPART B:The activity rate for the Finishing activity cost pool under activity based costing is closest to:AnswerPART C:What is the overhead cost assigned to Product LS-172 under activity based costing?Answer
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