Teecorp Company provides the following ABC costing information: Activities Total

Question

Teecorp Company provides the following ABC costing information: Activities Total Costs Activitycost drivers Labor $384,000 8,000 hours Gas $12,000 3,000 gallons Invoices $40,000 2,500 invoices Total costs $436,000 The above activities used by their three departments are: Lawn Department Bush Department Plowing Department Labor 2,700 hours 1,200 hours 4,100 hours Gas 1,800 gallons 900 gallons 300 gallons Invoices 1,400 invoices 300 invoices 800 invoices If labor hours are used to allocate the nonlabor, overhead costs, what is the overhead allocation rate?

Explanation / Answer

Total  nonlabor overhead costs = Gas + Invoices = $12,000 +  $40,000 = $52,000

Total Labour hours = 2,700 hours +1,200 hours + 4,100 hours = 8,000 hours .

Overhead allocation rate = Total overhead costs / Total Labour hours = $52,000 / 8,000 hours = $6.5 per hour

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.