Question

The following is taken from Ronda Co.'s internal records of its factory with two production departments. The cost driver for indirect labor and supplies is direct labor costs, and the cost driver for the remaining overhead items is number of hours of machine use. Direct Labor $17,000 15,000 $32,000 Machine Use Hours 1,820 1,380 3,200 Department 1 Department 2 Totals Factory overhead costs Rent and utilities Indirect labor General office expense Depreciation-Equipment Supplies Total factory overhead $ 10,400 4,95€ 4,900 3,900 3,050 $ 27,200 Compute the total amount of overhead cost allocated to Department 1 using activity-based costing. (Round activity rate answers to 2 decimal places.)

Answer 1

Answer: The Total Overhead Cost allocated to Department 1 is Caculated as Cost Driver Qunatity Incurred OH Allocated Activity Rate of Direct Labor 25% Cost Per Machine 6.00 Hour $ Costs to be Alloted Estimated Cost Estimated Cost Driver Indirect Labor and Direct Labor Supplies 8000 32000 Cost Rent, Utilities, general Machine Use office and depreciation 19200 3200 Hours Total OH cost Allocated 17,000 $ 4,250 $ 1820 $ $ 10,920 15,170

Cost Driver Qunatity Incurred Costs to be Alloted Estimated Cost Estimated Cost Driver Activity Rate OH Allocated Indirect Labor and Supplies -4950+3050 32000 Direct Labor Cost =B5/C5 of Direct Labor Cost 17000 =G5 E5 Rent, Utilities, general office and depreciation 3200 Machine Use Hours | =B6/C6 Per Machine Hour 1820 =10400+4900+3900 Total OH cost Allocated -G6*E6 =SUM(H5:16)