The following is taken from Clausen Company’s internal records
of its factory with two operating departments. The cost driver for
indirect labor is direct labor hours, and the cost driver for the
remaining items is number of hours of machine use. Compute the
total amount of overhead allocated to Dept. 2 using activity-based
costing.
Direct Labor Hours | Machine Hours | ||||||||
Operating Dept. 1 | 1,170 | 10,200 | |||||||
Operating Dept. 2 | 2,730 | 6,800 | |||||||
Totals | 3,900 | 17,000 | |||||||
Factory overhead costs | |||||||||
Rent and utilities | $ | 24,400 | |||||||
Indirect labor | 20,000 | ||||||||
Depreciation - Equipment | 17,600 | ||||||||
Total factory overhead | $ | 62,000 | |||||||
Multiple Choice
$14,000.
$16,800.
$31,200.
$30,800
$30,200.
Overhead allocated to department 2 = Rent and utilities (24,400/17,000)*6,800 + Indirect labor (20,000/3,900)*2,730 + Depreciation (17,600/17,000)*6,800 = 9,760 + 14,000 + 7,040 = 30,800 |
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The following is taken from Clausen Company’s internal records of its factory with two operating departments....
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