Assigning Costs to Activities
Craig Company produces electronic components for cell phone producers. The receiving department at Craig has eight clerks who process incoming goods. The total cost of their salaries is $440,000. The work distribution for the activities that they perform is as follows:
Required:
Assign the cost of labor to each of the three activities in the receiving department.
Apportion labor costs to the three activities in the receiving department.
Cost:
Cost can be defined as the cash and cash equivalent which is incurred against the products or its related services which will benefit the organization in the future. There are two types of costs that are direct and indirect costs.
Assignment of costs to various activities:
Activity |
Total Costs (A) ($) |
Time on each Activity (B) (%) |
Cost Assignment (C) |
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