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ABC Company has used a two-stage, reciprocal method cost allocation system for many years. In the first stage, overhead costs from its two service
ABC Company has used a two-stage, reciprocal method cost allocation system for many years. In the first stage, overhead costs from its two service departments (repair and administration) are allocated to its two production departments (assembly and packaging) based on the following activity levels: repair repair hours administration # of employees In the second stage, departmental overhead rates for the two production departments are calculated using direct labor hours as the activity for each department. The following information is available for the four departments: Repair Directly traced overhead $210,000 Repair hours 20,000 Number of employees 26 Admin $158,400 16,000 35 Assembly Directly traced overhead. $111,200 Packaging $160,000 Repair hours 1,000 3,000 Number of employees 10 4 Direct labor hours 12,000 30,000 During May, ABC Company started and completed two jobs, Job # 14 and Job # 27. ABC Company had no inventories of any type at the beginning of May. Information related to the two jobs is given below: Job #14 Prime costs $78,000 Job #27 $35,000 Direct labor hours in assembly 1,200 800 Direct labor hours in packaging 2,500 3,000 Units in the job 1,800 1,500 Units sold during March 1,120 850 Calculate the dollar amount of ABC Company's finished goods inventory balance at May 31.
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