Question
Copy of Riley's Land Management Company has $27,000 in indirect costs operating her company. She has identified three activities that drive these indirect cost and
Copy of Riley's Land Management Company has $27,000 in indirect costs operating her company. She has identified three activities that drive these indirect cost and created three related cost pools as detailed below:
Activities | Costs | Cost-drivers |
Labor Hours | $24,000 | 1000 hours |
Gas | $1,800 | 500 gallons |
Invoices | $1,200 | 250 invoices |
Total costs | $27,000 |
Riley has three divisions. Each division uses different amount of the cost driving activities as described below.
Department | Lawn | Bush | Plowing | Total |
Labor hours (hours) | 370 | 220 | ? | 1000 |
Gas (gallons) | 150 | ? | 80 | 500 |
Invoices (invoices) | ? | 70 | 50 | 250 |
If Riley allocates indirect costs to each division using the three cost pool above and three allocation rates how much of the $1,800 in indirect costs driven by gallons of gas used labor hours will be allocated to the lawn division?
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