Question

Lehner Corporation has provided the following data from its activity-based costing accounting system:

Indirect factory wages $520,000
Factory equipment depreciation $260,000

Distribution of Resource Consumption across Activity Cost Pools:

Activity Cost Pools
Customer Product
Orders Processing Other Total
Indirect factory wages 40% 50% 10% 100%
Factory equipment depreciation 15% 65% 20% 100%

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.

How much indirect factory wages and factory equipment depreciation cost would NOT be assigned to products using the activity-based costing system?

Answer 1

Answer:

$104,000

Explanation:

For Factory wages,

10% is not assigned to products.

For Factory Equipment Depreciation,

20% is not assigned to product.

The amount of indirect factory wages and factory equipment depreciation cost would NOT be assigned to products using the activity-based costing system is as follows:

= (Indirect factory wages × 10%) + (Factory equipment depreciation × 20%)

= ($520,000 × 0.10) + ($260,000 × 0.20)

= $52,000 + $52,000

= $104,000