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

question 44

Multiple Choice

Borden Corporation 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: $\begin{array}{lr}\text { Overhead Costs: }\\\text { Indirect labor } & \$ 260,000 \\\text { Depreciation } & 220,000 \\\text { Utilities } & 140,000 \\\text { Total}& \$ 620,000\end{array}$
Distribution of resource consumption:
Activity Cost Pools
$$\begin{array} { l r c c c } & \text { Assembly } & \text { Setting up} & \text { Other } & \text { Total } \\\text { Indirect labor } & 50 \% & 25 \% & 25 \% & 100 \% \\\text { Depreciation } & 20 \% & 30 \% & 50 \% & 100 \% \\\text { Utilities } & 25 \% & 45 \% & 30 \% & 100 \%\end{array}$$ How much overhead cost, in total, would be allocated to the Assembly activity cost pool?

• A) $209,000
• B) $310,000
• C) $196,333
• D) $200,000
• E) $155,000

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Definitions:

Dividend Income

Income received by shareholders from a company's earnings, distributed proportionally among shares.

Holders of Record

Registered owners of securities at a specific time who are entitled to receive dividends or distributions announced by a company.

Dividend Payable

A liability recorded on a company's balance sheet for the dividends declared by the board of directors that have not yet been paid out to shareholders.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the overall value of the company doesn't change.