Assigning Costs to Activities
McCourt Company produces small engines for lawnmower producers. The accounts payable department at McCourt has 10 clerks who process and pay supplier invoices. The total cost of their salaries is $500,000. The work distribution for the activities that they perform is as follows:
Assign the cost of labor to each of the three activities in the accounts payable department.
Apportion labor cost to the three activities in the accounts payable department.
Cost can be defined as the cash and cash equivalent which is incurred against the products or its related services which will benefit the organization in the future. There are two types of costs that are direct and indirect costs.
Assignment of costs to various activities:
Total Costs (A)
Time on each Activity (B)