Question

Nile Corp. has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming​ year: Cost Pool Overhead Costs Cost driver Activity level Supervision of direct labor $80,000 Direct labor−hours 800,000 Machine maintenance $169,200 Machine−hours 940,000 Facility rent $256,500 Square feet of area 135,000 Total overhead costs $505,700 The accounting records show the Mossman Job consumed the following​ resources: Cost driver Actual level Direct labor−hours 200 Machine−hours 1,700 Square feet of area 60 Using the three cost pools to allocate overhead​ costs, what is the total amount of overhead costs to be allocated to the Mossman​ Job?

Answer 1

Activity Expected Costs Expected Activity Activity Rate Activity driver incurred 200 Overhead assigned 80000 20 Supervision of direct labor Machine maintenance Facility rent 800000 direct labor hours 940000 machine hours 135000 sq ft of area 169 200 256500 306 0.10 per direct labor hour 0.18 per machine hour 1.90 per sq ft of area Total overhead costs 1700 60 114 440