Rossi Manufacturing has decided to use specific cost pools to allocate its overhead costs. Rossi has identified
Question:
Rossi Manufacturing has decided to use specific cost pools to allocate its overhead costs. Rossi has identified the following information for the current year:
Estimated
Estimated Allocation
Overhead Pool Allocation Base Cost Base
Pool 1 - Storage Number of parts $150,000 600,000
Pool 2 - Design Number of production runs $100,000 50
Pool 3 - Production Number of machine hours $250,000 40,000
Pool 4 - Quality Number of components tested $ 75,000 100,000
Pool 5 - Security Number of direct labor hours $180,000 15,000
If each unit takes 3 machine hours and 2,500 hours are used this month, the overhead cost for pool 3 allocated this month is: