Question: X Company, a merchandiser, buys and sells two different products, 1 and 2. The firm uses an activity-based costing allocation system to allocate its period costs to these products. Budgeted revenues and costs for the coming year are as follows:
|
Product 1 |
Product 2 |
Total |
| Revenue |
$1,240,000 |
$930,000 |
$2,170,000 |
| Expenses |
|
|
|
| Cost of Good Sold |
843,200 |
595,200 |
1,438,400 |
| Period |
|
|
|
| Salaries |
|
|
205,000 |
| Utilities |
|
|
28,000 |
| Data entry |
|
|
116,000 |
Salaries were allocated using Cost of Goods Sold as the cost driver. Driver information for the other two period costs are as follows:
| Activity |
Cost Driver |
Product 1 |
Product 2 |
| Utilities |
kilowatt hours |
79 |
27 |
| Data entry |
pages entered |
1,840 |
2,895 |
Using the activity-based costing system, what would be the allocation of period costs to Product 2 [round rate(s) to the nearest cent]?