The following is taken from Ronda Co.\'s internal records of its factory with tw

Question

The following is taken from Ronda Co.'s internal records of its factory with two operating 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.

Compute the total amount of overhead cost allocated to Operating Department 1 using activity-based costing. (Do not round intermediate calculations and round activity rate answers to 2 decimal places.)

cost to be allocated / Estimated cost/ Estimated cost driver/activity rate/cost   

-indirect labor and supplies/$8000

-rent,utilities,general office and depre./$19,200

driver quantaty incurred/OH Allocated

Direct Labor Machine Use Hours   Operating department 1 $ 18,800 2,000   Operating department 2 13,200 1,200      Totals $ 32,000 3,200      Factory overhead costs      Rent and utilities $ 12,200      Indirect labor 5,400      General office expense 4,000      Depreciation-Equipment 3,000      Supplies 2,600         Total factory overhead $ 27,200   

Explanation / Answer

Hi,

Please find the answer as follows:

Total Amount of Overhead Allocated to Operating Department 1:

Answer is 16700

Thanks.

Factory Overhead Cost Driver Total
Hours/Cost Cost/Hours
Allocated to
Operating Department 1 Total
Overheads Overhead
Allocated to
Operating Department 1 Rent and utilities Machine Hrs 3200 2000 12200 7625 Indirect labor Direct Lbr Cost 32000 18800 5400 3172.5 General office expense Machine Hrs 3200 2000 4000 2500 Depreciation-Equipment Machine Hrs 3200 2000 3000 1875 Supplies Direct Lbr Cost 32000 18800 2600 1527.5 Total factory overhead


27200 16700

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