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

question 33

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: $\begin{array}{l}\text { Overhead Costs: }\\\begin{array} { l r } \text { Indirect labor } & \$ 260,000 \\\text { Depreciation } & 220,000 \\\text { Utilities } & \underline{140,000} \\\text { Total }& \underline{\$ 620,000} \\\end{array}\end{array}$
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 Setting Up activity cost pool?

• A) $206,000
• B) $194,000
• C) $279,000
• D) $217,000
• E) $155,000

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Definitions:

John Kotter

A professor of leadership at Harvard Business School best known for his work on change management and leadership.

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The process through which individuals learn and adapt to the norms and expectations of a culture or group before they formally enter it.

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A company culture that struggles to adjust to new challenges, technologies, or environments, limiting progress and innovation.

Risk Taking

The act of undertaking actions or decisions that involve potential for loss or failure, typically in the hope of achieving a significant reward.