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ZZ, Inc. operates three service departments, repair, administration, and power along with two production departments, cutting and assembly. Service department costs are allocated to the
ZZ, Inc. operates three service departments, repair, administration, and power along with two production departments, cutting and assembly. Service department costs are allocated to the production departments using a sequential two-stage allocation method. The service department costs are allocated using the following activities: Repair - allocated on the basis of maintenance hours Administration - allocated on the basis of number of employees Power - allocated on the basis of kilowatt hours In the second stage, departmental overhead rates for the two production departments are calculated using machine hours as the cost driver for the cutting department and direct labor hours as the cost driver for the assembly department. Information for the three service departments is given below: Repair Admin Power Directly trace overhead $128,000 80,000 $180,000 Number of employees 20 15 30 Maintenance hours 6,000 36,000 30,000 Kilowatt hours 12,000 32,000 15,000 Information for the two production departments is given below: Cutting Assembly Directly trace overhead $322,000 $270,000 Number of employees 28 12 Maintenance hours 9,000 15,000 Kilowatt hours 20,000 16,000 Direct labor hours 10,000 35,000 Machine hours 15,000 25,000 The company started and completed job #17 during the most recent month. Information about job #17 appears below: Job #17 Direct labor hours in cutting 180 Direct labor hours in assembly 520 Machine hours in cutting 260 Machine hours in assembly 340 Calculate the total amount of overhead cost applied to Job #17.
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