CKM Is an architectural firm that designs and builds buildings. It prices each job on a cost plus 20% basis. Overhead costs in 2014 are 4,011,780. CKMs simple costing system allocates overhead costs to its jobs based on number of jobs. There were three jobs in 2014. One customer, Sanders has complained that the cost of its building in Chicago was not competitive. As a result the controller has initiated a detailed review of the overhead allocation to determine if overhead costs are charged to jobs in proportion to consumption of overhead resources by jobs. She gathered the following information

Department	Cost driver	Overhead costs in 2014	sanders	hanley	Stanley
Design	Design department hours	1,500,000	1,000	5,000	4,000
Engineering	Number of engineers	500,000	2,000	2,000	2,200
Construction	Labor-hours	2,011,750	20,800	21,500	19,600

4,011,780

Compute the overhead allocated to each project in 2014 using the simple costing system

Compute the overhead allocared to each project in 2014 using department overhead cost rates

Do you think sanders has a valid reason for dissatisfaction with the cost? How does the allocation based on department rates change costs for each project?

What value, if any, would ckm get by allocating costs of each department based on the activities done in that department?