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

question 305

Multiple Choice

Lakatos Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs: The distribution of resource consumption across the three activity cost pools is given below:
How much cost, in total, would be allocated in the first-stage allocation to the Fabricating activity cost pool?

• A) $88,000
• B) $132,000
• C) $264,000
• D) $120,000

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Definitions:

Free-Rider Problem

A situation in economics where individuals benefit from resources or services without paying for their cost, leading to underprovision or depletion of those resources.

Broadly Available

Refers to something that is widely accessible or obtainable by a large portion of the population without significant restrictions.

Nonmembers

Individuals who are not part of a specific group or organization.

Staff Organization

The structured arrangement of roles, responsibilities, and relationships within a workplace, designed to facilitate efficient operation and achievement of the organization's goals.