Riley's Land Management Company has $27,000 in indirect costs operating her company. She has identified...

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Accounting

Riley's Land Management Company has $27,000 in indirect costs operating her company. She has identified three activities that drive these indirect cost and created three related cost pools as detailed below:

Activities Costs Cost-drivers
Labor Hours $24,000 1200 hours
Gas $1,800 300 gallons
Invoices $1,200 250 invoices
Total costs $27,000

Riley has three divisions. Each division uses different amount of the cost driving activities as described below.

Department

Lawn

Bush

Plowing

Total
Labor hours (hours)

340

230

?

1200
Gas (gallons)

120

?

70

300
Invoices (invoices)

100

100

50

250

How much indirect cost would be assigned to the Lawn division if Riley uses three cost pools and allocation bases?

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