Allocating indirect cost over varying levels of production Gatch Company’s annual factory depreciation is $18,000. Gatch estimated it would operate the factory a total of 2,400 hours this year. The factory operated 200 hours in November and 150 hours in December.

Required Why would Gatch need to allocate factory depreciation cost? How much depreciation cost should Gatch allocate to products made in November and those made in December?