Diehl Company 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:

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.
-How much cost,in total,should not be allocated to orders and products in the second stage of the allocation process if the activity-based costing system is used for internal decision making?
A) $0.
B) $58,000.
C) $68,000.
D) $116,000.

Question

Diehl Company 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:

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.
-How much cost,in total,should not be allocated to orders and products in the second stage of the allocation process if the activity-based costing system is used for internal decision making?
A) $0. 
B) $58,000. 
C) $68,000. 
D) $116,000.

Quizplus · Accepted Answer

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs, which should not be allocated to orders and products in the second stage of the allocation process. Therefore, the total cost that should not be allocated is $68,000 (the total cost of the "Other" activity cost pool). Option C is the correct answer.

Diehl Company Uses an Activity-Based Costing System with Three Activity