Question at position 19 [table]
UtopiaTech Corporation has an activity-based costing system with the following three activity pools and estimated activity for the coming year (see the first table below). The distribution of resource consumption across the three activity cost pools are provided in the second table. What percentage of the total factory utilities cost has been allocated to the Order Processing cost pool? (If your response is 10%, simply type 10.00 without percentage sign) | | | | Activity Cost Pool | Total Activity | | Assembly | 25,000 | DLHs | | Order Processing | 200 | orders | | Other | Not applicable | | | | | | | | | | Cost Allocated to Cost Pools | Assembly | Order Processing | Other | Total Wages and salaries | $10,000 | $50,000 | $40,000 | $100,000 Factory Utilities | $20,000 | $60,000 | $40,000 | $120,000 Other overhead costs | $60,000 | $50,000 | $70,000 | $180,000
[/table]Answer[table]
UtopiaTech Corporation has an activity-based costing system with the following three activity pools and estimated activity for the coming year (see the first table below). The distribution of resource consumption across the three activity cost pools are provided in the second table. What percentage of the total factory utilities cost has been allocated to the Order Processing cost pool? (If your response is 10%, simply type 10.00 without percentage sign) | | | | Activity Cost Pool | Total Activity | | Assembly | 25,000 | DLHs | | Order Processing | 200 | orders | | Other | Not applicable | | | | | | | | | | Cost Allocated to Cost Pools | Assembly | Order Processing | Other | Total Wages and salaries | $10,000 | $50,000 | $40,000 | $100,000 Factory Utilities | $20,000 | $60,000 | $40,000 | $120,000 Other overhead costs | $60,000 | $50,000 | $70,000 | $180,000
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Question

BlackTom AI · Accepted Answer

To begin, let's restate the key data clearly: we are dealing with factory utilities costs allocated across three activity cost pools—Assembly, Order Processing, and Other. The factory utilities amounts given are: Assembly $20,000, Order Processing $60,000, and Other $40,000, for a total factory utilities cost of $120,000.

Now, assess what percentage of the total utilities cost is allocated to the Order Processing pool. You take the amount allocated to Order Processing and divide by the total utilities cost:

Order Processing utilities = $60,000
Total utilities = $120,000

Compute the ratio: 60,000 / 120,000 = 0.5
Convert to a percentage: 0.5 × 100% = 50%

Thinking through potential misreadings helps prevent mistakes. If someone mistakenly used only the Order Processing portion relative to the entire overheads, they might forget that the denominator is the entire factory utilities cost (the sum across all pools), not just a subset. Another common error is confusing the measured activity with the cost allocation; here we explicitly use the cost amounts given for each pool to form the total utilities base.

In short, the correct interpretation is that Order Processing consumes half of the total factory utilities, which corresponds to 50% of the utilities cost.

Edge case considerations: ensure you are using the correct total (sum of Assembly, Order Processing, and Other utilities, not just a single pool), and verify that the figures align with the provided table for accuracy. If you ever encounter a mismatch between pool costs and total, re-sum the components to confirm the denominator before computing the percentage.

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