Market Corporation Has an Activity-Based Costing System with Three Activity $\begin{array}{ll}\text { Factory utilities } & \$ 39,000 \\\text { Indirect labor } & \$ 3,000\end{array}$

question 31

Essay

Market Corporation has an activity-based costing system with three activity cost pools-Processing, Batch Setup, 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:
$\begin{array}{ll}\text { Factory utilities } & \$ 39,000 \\\text { Indirect labor } & \$ 3,000\end{array}$

$$\begin{array}{l}\text { Distributim of Resaure Cmsumption Acrass Activity Cast Paols }\\\begin{array} { | l | c | c | c | } \hline & \text { Processing } & \text { Batch Setup } & \text { Other } \\\hline \text { Factary utilities } & 0.10 & 0.60 & 0.30 \\\hline \text { Indirect labor } & 0.30 & 0.10 & 0.60 \\\hline\end{array}\end{array}$$
Required:
Assign overhead costs to activity cost pools using activity-based costing.

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Definitions:

Matching Principle

An accounting principle that dictates that expenses should be matched with the revenues they helped to generate in the same period.

Revenues

Revenues refer to the total amount of money earned by a company from its business activities, such as the sale of goods or services, before any expenses are subtracted.

Expenses

Outflows or other using up of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Accrual Adjusting Entry

An accounting entry made to record revenues earned or expenses incurred that have not yet been recorded through regular transactions.