Question
Overhead costs for the period are estimated to be $41,340 for utilities; $121,750 for executive administration; $72,050 for plant maintenance; and $65,000 for purchasing. Five
Overhead costs for the period are estimated to be $41,340 for utilities; $121,750 for executive administration; $72,050 for plant maintenance; and $65,000 for purchasing. Five possible cost drivers are available: machine hours (MHs), direct labor hours (DLHs), square footage occupied (SF), units produced (UNITS), and direct materials quantity (DMQ, in pounds); equal allocation (EQL) to activities or products is also allowable. The company anticipates purchasing and using a total of 100,000 pounds of direct materials in the period.
Assume that direct materials quantity (DMQ, in pounds) is selected as the cost driver for allocating Purchasing costs, and that the Assembly department uses 63,540 pounds of direct materials in production. How much Purchasing cost should be assigned to the Assembly department for the period? (Round to the nearest dollar.)
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