Question

Hagy Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Data concerning the company's costs and activity-based costing system appear below:

Factory utilities (total)	$	107,000
Indirect labor (total)	$	9,500

Distribution of Resource Consumption Across Activity Cost Pools

	Processing	Setting Up	Other
Factory utilities	0.10	0.50	0.40
Indirect labor	0.10	0.20	0.70

	Activity Cost Pools Processing Setting Up Other Total Factory utilities $0 Indirect labor $0 Total $0 $0 $0 $0

Required:

Assign overhead costs to activity cost pools using activity-based costing.

	Activity Cost Pools Processing Setting Up Other Total Factory utilities Indirect labor Total

Answer 1

	Activity Cost Pools
	Processing	Setting Up	Other	Total
Factory utilities	10700	53500	42800	107000
Indirect labor	950	1900	6650	9500
Total	11650	55400	49450	116500
Workings:
	Processing	Setting Up	Other
Factory utilities	=107000*0.10	=107000*0.50	=107000*0.40
Indirect labor	=9500*0.10	=9500*0.20	=9500*0.70