Furniture Company Uses an Activity-Based Costing System in Which There

question 30

Multiple Choice

Furniture Company uses an activity-based costing system in which there are three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system:
$\begin{array}{|l|r|}\hline \text { Costs: } & \\\hline \text { Manufacturing overhead } & \$ 600,000 \\\hline \text { Selling and administrative expenses } & \underline{300,000} \\\hline \text { Total } & \$ 900,000\\\hline\end{array}$

$\text { Distribution of Resource Consumption: }$

$\begin{array}{|l|r|r|r|r|}\hline & \text { Order Size } & \begin{array}{r}\text { Customer } \\\text { Support }\end{array} & \text { Other } & \text { Total } \\\hline \begin{array}{l}\text { Manufacturing } \\\text { overhead }\end{array} & 45 \% & 50 \% & 5 \% & 100 \% \\\hline \begin{array}{l}\text { Selling and } \\\text { administrative } \\\text { expenses }\end{array} & 40 \% & 45 \% & 15 \% & 100 \% \\\hline\end{array}$

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 the costs to the activity cost pools.


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

• A) $280,000.
• B) $355,000.
• C) $380,000.
• D) $435,000.

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Definitions:

Profit-Sharing Program

A company incentive plan in which employees receive a portion of the company's profits, enhancing motivation and loyalty.

Skill-Based Pay Plan

A compensation system that determines employees' pay rates based on their skills, knowledge, and abilities rather than their job position or title.

Reward Motivation

The drive to perform actions or engage in behaviors due to the anticipation of positive reinforcements or rewards.

Timeliness

The quality or habit of occurring, acting, or being done at the appropriate or planned time.