Dierich 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) $82,000.
C) $104,000.
D) $164,000.

Question

Dierich 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) $82,000. 
C) $104,000. 
D) $164,000.

Quizplus · Accepted Answer

The cost that should not be allocated to orders and products in the second-stage allocation process is the cost of the "Other" activity cost pool, which consists of idle capacity and organization-sustaining costs.

The total cost in the "Other" activity cost pool is $104,000 ($42,000 + $62,000). This cost is not directly attributable to any specific product or order, and therefore, should not be allocated to them.

Therefore, the best choice is C) $104,000.

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