Exercise 17-11 Activity-based costing and overhead cost allocation LO P3

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

	Direct Labor				Machine Use Hours
Department 1		$	18,800				2,000
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
DepreciationEquipment							3,000
Supplies							2,600
Total factory overhead						$	27,200

Compute the total amount of overhead cost allocated to Department 1 using activity-based costing. (Round activity rate answers to 2 decimal places.)

Costs to be allocated	Estimated Cost	Estimated Cost driver		Activity Rate		Cost driver quantity incurred	OH Allocated
Indirect labor and supplies
Rent, utilities, general office and depreciation				0