The following is taken from Mortan 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-basedcosting.

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Direct Labor Machine Use Hours Operating department.... Operating department 2 .. ...$18.800 13.200 2,000 1200 3.200 $32,000 Factory overhead costs 5.400 3,000 2,600 Supplies