The following is taken from Maxwell 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.

 

 

 

Direct Labor                                        Machine Use Hours

Operating department 1 . . . . . . . . .                          $10,400                                                                2,200

Operating department 2 . . . . . . . . .                          9,600                                                                     3,000

Totals . . . . . . . . . . . . . . . . . . . . . . . .                           $20,000                                                                5,200

Factory overhead costs

Rent and utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                            $ 7,100

Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                            3,700

General office expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                            2,700

Depreciation—Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                            4,500

Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                            300

Total factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                            $18,300