Figge and Mathews 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:Costs: Wages and salaries$420,000Travel expenses 120,000Other expenses 180,000Total$720,000Distribution of resource consumption:Activity Cost Pools?Working On EngagementsBusiness DevelopmentOtherTotalWages and salaries50%20%30%100%Travel expenses45%45%10%100%Other expenses15%45%40%100%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?
What will be an ideal response?
All three parts can be answered using a first-stage allocation of costs.The amount in each cell in the table below is computed by multiplying the cost for the category by the percentage for the activity. For example, $210,000 is equal to $420,000 multiplied by 0.50.
| Working On Engagements | Business Development | Other | Total | |||||
| Wages and salaries | $ | 210,000 | $ | 84,000 | $ | 126,000 | $ | 420,000 |
| Travel expenses | 54,000 | 54,000 | 12,000 | 120,000 | ||||
| Other expenses | 27,000 | 81,000 | 72,000 | 180,000 | ||||
| Total | $ | 291,000 | $ | 219,000 | $ | 210,000 | $ | 720,000 |
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What will be an ideal response?