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    Overhead Allocation, Delivery Expense, Responsibility Accounting

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    1. If the predetermined overhead allocation rate is 85% of direct labor cost, and the Polishing Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

    Factory Overhead 17,000
    Goods in Process Inventory, Painting Dept 17,000

    True/False

    2. A company has two departments, A and B, that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. A had a direct expense of $1,000 for deliveries. None of the $9,000 is a direct expense to Dept. B. The analysis also indicates that 60% of regular delivery requests originate in Dept. A and 40% in Dept. B. The delivery expenses that should be charged to Dept. A and Dept. B, respectively, are

    A B
    A. 4,500 4,500
    B. 5,800 3,200
    C. 5,500 3,500
    D. 5,500 4,500
    E. 5,400 3,600

    3. A responsibility accounting report that compares actual costs and expenses for a department with the budgeted amounts is called a(n):

    A. Performance Report
    B. Service Report
    C. Income Statement
    D. Balance Sheet
    E. Cost Report

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    https://brainmass.com/business/business-philosophy-and-ethics/overhead-allocation-delivery-expense-responsibility-accounting-232945

    Solution Preview

    1. If the predetermined overhead allocation rate is 85% of direct labor cost, and the Polishing Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

    Factory Overhead ...

    Solution Summary

    The following response provides the steps to compute the overhead allocation.

    $2.19