Santana Corporation manufactures snowmobiles in its Blue Mountain, Wisconsin, plant. The...


Santana Corporation manufactures snowmobiles in its Blue Mountain, Wisconsin, plant. The following costs are budgeted for the first quarter's operations.

  1. Machine setup, indirect materials $ 4,000
  2. Inspections 16,000
  3. Tests 4,000
  4. Insurance, plant 110,000
  5. Engineering design 140,000
  6. Depreciation, machinery 520,000
  7. Machine setup, indirect labor 20,000
  8. Property taxes 29,000
  9. Oil, heating 19,000
  10. Electricity, plant lighting 21,000
  11. Engineering prototypes 60,000
  12. Depreciation, plant 210,000
  13. Electricity, machinery 36,000
  14. Machine maintenance wages 19,000

Classify the above costs of Santana Corporation into activity cost pools using the following: engineering, machinery, machine setup, quality control, factory utilities, maintenance. Next, identify a cost driver that may be used to assign each cost pool to each line of snowmobiles.

What Is A Cost Pool:

In the Activity-Based Costing system, companies must form Cost Pools for their various costs. A Cost Pool is essentially a grouping of costs that are usually driven by the same factors and behave similarly based on the cost driver's activity level.

Answer and Explanation: 1

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See below.

Cost$Cost pool
Machine setup, indirect materials 4,000Machine setup
Inspections 16,000Quality control
Tests 4,000Quality control

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Learn more about this topic:

Activity Cost Pools: Definition & Examples


Chapter 7 / Lesson 21

Activity cost pools are groups of costs that are influenced by a common cost driver, determining how much each cost occurs. Identify various activity cost pools through several examples, noting the common cost driver for each.

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