Dideda Company Uses an Activity-Based Costing System with Three Activity

question 59

Multiple Choice

Dideda Company 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:
$\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 360,000 \\\hline \text { Selling and administrative expenses } & \underline { 240,000 } \\\hline \text { Total } & \$ 600,000 \\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$$\begin{array} { |l | r | r | r | r | } \hline & \text { Order Size } & \begin{array} { r } \text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} & 25 \% & 65 \% & 10 \% & 100 \% \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 60 \% & 20 \% & 20 \% & 100 \% \\\hline\end{array}$ The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.


-How much cost,in total,would be allocated in the first-stage allocation to the Order Size activity cost pool?

• A) $150,000.
• B) $234,000.
• C) $255,000.
• D) $360,000.

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Definitions:

Sweat

A liquid produced by the body's sweat glands designed to cool the body through evaporation, also known as perspiration.

Dermis

The thick layer of living tissue below the epidermis containing hair follicles, sweat glands, and providing mechanical strength to the skin.

True Skin

Another term for the dermis, the layer of skin located beneath the epidermis, containing nerve endings, sweat glands, and blood vessels.

Hypo-

A prefix meaning low, under, beneath, down, or below normal, often used in medical terms.