Overhead Allocation Based on Activity Drivers

Department Details:

• Department E:
  • Direct Costs: $900,000
  • Indirect Costs: $500,000
  • Allocation Base: Direct Labor Hours (DLH)
  • DLH Used: 45,000

• Department F:
  • Direct Costs: $850,000
  • Indirect Costs: $450,000
  • Allocation Base: Machine Hours (MH)
  • MH Used: 40,000

Requirements:

• Allocate overhead costs to Department E and Department F using their respective allocation bases.
• Calculate the total cost for each department.
• Present the overhead allocation in a table format.
• Analyze the impact of overhead allocation on departmental performance.