Huish Awnings makes custom awnings for homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity cost pools:

Overhead Costs:

Production overhead $150,000

Office expense 100,000

Total $250,000

Distribution of resource consumption:

Activity Cost Pools

Making Awnings Job Support Other Total

Production overhead 45% 40% 15% 100%

Office expenses 8% 65% 27% 100%

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows:

Activity Cost Pool Annual Activity

Making awnings 5,000 metres

Job support 200 jobs

Other Not applicable

Prepare the first-stage allocation of overhead costs to the activity cost pools

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24 April, 04:18

Huish Awnings makes custom awnings for homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity cost pools:

Overhead Costs:

Production overhead $150,000

Office expense 100,000

Total $250,000

Distribution of resource consumption:

Activity Cost Pools

Making Awnings Job Support Other Total

Production overhead 45% 40% 15% 100%

Office expenses 8% 65% 27% 100%

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows:

Activity Cost Pool Annual Activity

Making awnings 5,000 metres

Job support 200 jobs

Other Not applicable

Prepare the first-stage allocation of overhead costs to the activity cost pools

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Answers (1)

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Melina Chapman · Answer 1

Answer and Explanation:

The preparation of the First stage allocation of overhead costs to the activity cost pools is presented below

Particulars Making awnings Job Support Other Total

Production Overhead $67,500 $60,000 $22,500 $150,000

Office Expenses $8,000 $65,000 $27,000 $100,000

The production overhead is allocated in 45% 40%, 15% and 100%

And,

The office expenses is allocated in 8%, 65%, 27% and 100%

The same is shown above