Exercise 12-8 Allocating costs among products LO 12-3 Zachary Construction Compa

Question

Exercise 12-8 Allocating costs among products LO 12-3 Zachary Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows: Home 2 $ 79,000 $101,000 $181,000 Home 1 Expected Costs Direct labor Direct materials Home 3 96,e00 145,08e 191,000 Assume Zachary needs to allocate two major overhead costs($54,150 of employee fringe benefits and $8,640 of indirect materials costs) among the three jobs. Required Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. (Round "Allocation rate" to 2 decimal places.)

Explanation / Answer

=+54150/(79000+101000+181000)=.15

=+8640/(96000+145000+191000)=.02

House Allocation Rate Weight of Base Allocated Cost 1 0.15 79000 11850 2 0.15 101000 15150 3 0.15 181000 27150

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