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Overhead Allocation Based on Activity DriversDepartment Details:Department C:Direct Costs: $800,000Indirect Costs: $450,000Allocation Base: Direct Labor...

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Accounting

Overhead Allocation Based on Activity Drivers

Department Details:

  • Department C:
    • Direct Costs: $800,000
    • Indirect Costs: $450,000
    • Allocation Base: Direct Labor Hours (DLH)
    • DLH Used: 40,000
  • Department D:
    • Direct Costs: $750,000
    • Indirect Costs: $400,000
    • Allocation Base: Machine Hours (MH)
    • MH Used: 35,000

Requirements:

  • Allocate overhead costs to Department C and Department D 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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