Gutknecht Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system: Distribution of resource consumption:
How much cost, in total, would be allocated in the first-stage allocation to the Other activity cost pool?
A) $138,000
B) $210,000
C) $180,000
D) $216,000

Question

Gutknecht Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:  Distribution of resource consumption:
 How much cost, in total, would be allocated in the first-stage allocation to the Other activity cost pool?
A) $138,000 
B) $210,000 
C) $180,000 
D) $216,000

Quizplus · Accepted Answer

To allocate costs in the first stage, we need to add up the total overhead costs and allocate them based on the activity cost drivers.

Total overhead costs = $1,470,000 + $600,000 + $330,000 = $2,400,000

Allocating costs to Other activity cost pool:

Other cost driver rate = $600,000 / 3,000 machine-hours = $200 per machine-hour

Activity consumption for Other = 900 machine-hours

Cost allocated to Other = $200 per machine-hour x 900 machine-hours = $180,000

Thus, the total cost allocated to the Other activity cost pool in the first-stage allocation is $180,000. Therefore, the best choice is B.

Gutknecht Corporation Uses an Activity-Based Costing System with Three Activity