Question
Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the comingyear: Cost Pool Overhead Costs Cost driver
Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the comingyear:
Cost Pool Overhead Costs Cost driver Activity level
Supervision of direct labor$320,000 Direct labor hours800,000
Machine maintenance$120,000 Machine hours960,000
Facility rent $200,000 Square meters of area100,000
Total overhead costs$640,000
The accounting records show the Mossman Job consumed the followingresources:
Cost driver Actual level
Direct labourhours 200
Machinehours 1,600
Square meters of area 50
If Gregory Enterprises uses a simple cost system based on direct labor hours then what amount of indirect costs will be allocated to the Mossmanjob?
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