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Company A has identified three cost pools to allocate overhe

Company A has identified three cost pools 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 $320,000 Direct labor-hours 800,000
Machine maintenance $120,000 Machine-hours 960,000
Facility rent $200,000 Square feet of area 100,000
Total overhead costs $640,000

The accounting records show the Product A Job consumed the following resources:

Cost driver Actual level
Direct labor-hours 200
Machine-hours 1,600
Square feet of area 50

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

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

? If Company A uses the three activity cost pools to allocate overhead costs, what are the activity-cost driver rates for 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 Product A Job?

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Company A has identified three cost pools 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 $320,000 Direct labor-hours 800,000
Machine maintenance $120,000 Machine-hours 960,000
Facility rent $200,000 Square feet of area 100,000
Total overhead costs $640,000

The accounting records show the ProductA Job consumed the following ...

Solution Summary

This solution is comprised of a detailed explanation to calculate what is the single cost driver rate for Company A, the amount of overhead costs allocated to the Product A Job, the activity-cost driver rates for supervision of direct labor, machine maintenance, and facility rent, respectively, and the total amount of overhead costs to be allocated to the Product A Job.

$2.19