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Northeast, Inc. is a technology consulting firm focused on Web site development and integration of Internet business applications. The company has computed a predetermined overhead
Northeast, Inc. is a technology consulting firm focused on Web site development and integration of Internet business applications. The company has computed a predetermined overhead allocation rate of $180 per direct labor hour. The president of Northeast suspects that her allocation of indirect costs could be giving misleading results, so she decides to develop an ABC system. She identifies three activities: documentation preparation, information technology support, and training. She figures that documentation costs are driven by the number of pages, information technology support costs are driven by the number of software applications used, and training costs are driven by the number of direct labor hours worked. Estimates of the costs and quantities of the allocation bases follow: (Click the icon to view the estimates.) Compute the predetermined overhead allocation rate for each activity. Round to the nearest dollar. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate fo each activity. (Round your answers to the nearest whole dollar. Abbreviation used: IT = information technology.) Predetermined OH allocation rate Document preparation + = + IT support Training = Northeast, Inc. is a technology consulting firm focused on Web site development and integration of Internet business applications. The company has computed a predetermined overhead allocation rate of $180 per direct labor hour. The president of Northeast suspects that her allocation of indirect costs could be giving misleading results, so she decides to develop an ABC system. She identifies three activities: documentation preparation, information technology support, and training. She figures that documentation costs are driven by the number of pages, information technology support costs are driven by the number of software applications used, and training costs are driven by the number of direct labor hours worked. Estimates of the costs and quantities of the allocation bases follow: (Click the icon to view the estimates.) Compute th Data table tion rate for Begin by se each activity Activity Estimated Cost Estimated Quantity of Allocation Base Allocation Base $ 180,000 Pages Documentation preparation Information technology support 4,000 pages 840 applications 100,800 Applications used Document Training 529,200 Direct labor hours 4,200 hours $ IT support 810,000 Total indirect costs Training Print Done
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