Question: Global Enterprises has identified three cost pools and three corresponding cost drivers to allocate overhead costs. The following estimates are provided for the coming year:

Global Enterprises has identified three cost pools and three corresponding cost drivers to allocate overhead costs. The following estimates are provided for the coming year:

Cost Pool

Overhead Costs

Cost Driver

Activity Level

Supervision of direct labor

$480,000

Direct labor-hours

800,000

Machine maintenance

$220,000

Machine-hours

550,000

Facility rent

$260,000

Square feet of area

100,000

Total overhead costs

$960,000

The accounting records show the Leaf Job consumed the following resources:

Cost Driver

Activity Level

Direct labor-hours

600

Machine-hours

2,100

Square feet of area

90

If direct labor-hours are considered as the only overhead cost driver, what is the single cost driver rate for Global Enterprises?

Using direct labor-hours as the only overhead cost driver, what is the amount of overhead costs allocated to the Leaf Job?

Global Enterprises uses the three activity cost pools to allocate overhead costs, what are the activity-cost driver rates for the supervision of direct labor, machine maintenance, and facility rent, respectively?

Using the three cost pools to allocate overhead costs, what is the total amount of overhead costs to be allocated to the Leaf Job?

Which method of allocation probably best estimates actual overhead costs used for Global Enterprises? Why?

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