Clausen Company internal records of its factory with 2 operating departments. Th

ID: 2329101 • Letter: C

Question

Clausen Company internal records of its factory with 2 operating departments. The cost driver for indirect labor is direct labor house, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of indirect labor allocated to Department 1 using activity based costing. (Please show the formula and how you got the answer)

Answers:

a) 8,000

b) 53,000

c) 12,270

d) 8, 480

e) 14,133

DL HOURS MACHINE HOURS Department 1 894 12,000 Department 2 2086 8,000 Totals 2980 20,000 Factory Overhead costs Rent and Utilities 21,200 Indirect Labor 16,800 Depreciation - Equipment 13,500 Total Factory Overhead $51,500

Explanation / Answer

Answer

>Indirect labor,
>allocated to Department 1

Amount of Indirect Labor

$ 16,800.00

Cost driver

Direct Labor hours

C [given]

Total Direct Labor hours

2,980 direct labor hours

D = A/C

Indirect Labor per direct labor hour

$ 5.637583893 per Direct labor hour

[16800 / 2980]

E [given]

Direct Labor hour in Department 1

894 direct labor hours

F = D x C

Total amount of Indirect Labor allocated to Department 1

$ 5,040.00 = ANSWER

[894 x 5.637583893]