Overhead Allocation Based on Activity DriversDepartment Details:Department A:Direct Costs: $700,000Indirect Costs: $400,000Allocation Base: Direct Labor...
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Accounting
Overhead Allocation Based on Activity Drivers
Department Details:
Department A:
Direct Costs: $700,000
Indirect Costs: $400,000
Allocation Base: Direct Labor Hours (DLH)
DLH Used: 35,000
Department B:
Direct Costs: $650,000
Indirect Costs: $350,000
Allocation Base: Machine Hours (MH)
MH Used: 30,000
Requirements:
Allocate overhead costs to Department A and Department B using their respective allocation bases.
Calculate the total cost for each department.
Present the overhead allocation in a detailed table format.
Analyze the impact of overhead allocation on departmental performance.
Discuss the implications of overhead allocation on product costing and pricing.
Evaluate the effectiveness of different overhead allocation methods.
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