Fife & Jones PLC,a Consulting Firm,uses an Activity-Based Costing in Which

question 100

Essay

Fife & Jones PLC,a consulting firm,uses an activity-based costing in which there are three activity cost pools.The company has provided the following data concerning its costs and its activity-based costing system:
$$\begin{array} { | l | r | } \hline \text { Costs: } & \\\hline \text { Wages and salaries } & \$ 540,000 \\\hline \text { Travel expenses } & 100,000 \\\hline \text { Other experses } & \$ 140,000 \\\hline \text { Total } & \$ 780,000 \\\hline\end{array}$$
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 & \begin{array} { r } \text { Working on } \\\text { Engagements }\end{array} & \begin{array} { r } \text { Busines } \\\text { Development }\end{array} & \text { Other } & \text { Total } \\\hline \text { Wages and salaries } & 50 \% & 20 \% & 30 \% & 100 \% \\\hline \text { Travel experses } & 60 \% & 30 \% & 10 \% & 100 \% \\\hline \text { Other experses } & 35 \% & 25 \% & 40 \% & 100 \% \\\hline\end{array}$$
Required:
a)How much cost,in total,would be allocated to the Working On Engagements activity cost pool?
b)How much cost,in total,would be allocated to the Business Development activity cost pool?
c)How much cost,in total,would be allocated to the Other activity cost pool?

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Definitions:

Net Realisable Value

The estimated selling price in the ordinary course of business minus any costs necessary to make the sale, used primarily in inventory valuation.

Inventory Accounts

Accounts used in accounting to track the cost of the inventory held by a business until it is sold or otherwise disposed of.

Cost of Goods Manufactured

The total cost of producing goods during a specific period, including materials, labor, and overhead.

Total Manufacturing Costs

The aggregate cost of direct materials, direct labor, and manufacturing overhead incurred for products produced.