Question Completion:
Overhead costs:
Wages & salaries $ 925,000
Factory depreciation 125,000
Marketing department expenses 330,000
Total $ 1,380,000
Distribution of resource consumption:
Activity Cost Pools
Customer Product Others Total
Orders Designs
Wages & salaries 42% 46% 12% 100%
Factory depreciation 53% 33% 14% 100%
Marketing
department expenses 41% 34% 5 100%
The amount of activity for the year is as follows:
Cost Pool Activity
Customer Orders 2,125 Orders
Product Designs 325 Designs
Answer:
Licensed Gear Co.
The Overhead cost allocated to Cyclone Tailgaters is:
= $15,475.70
Explanation:
a) Data and Calculations:
Distribution of resource consumption:
Activity Cost Pools
Customer Product Others Total
Orders Designs
Wages & salaries 42% 46% 12% 100%
Factory depreciation 53% 33% 14% 100%
Marketing
department expenses 41% 54% 5 100%
Activity Cost Pools: Wages Factory Marketing Total
& salaries Dept. Dept.
Customer orders $388,500 $66,250 $135,300 $590,050
Product Designs 425,500 41,250 178,200 644,950
Others 111,000 17,500 16,500 145,000
Total $925,000 $125,000 $330,000 $1,380,000
Overhead rates: Amount Activity Overhead Rates
Customer orders $590,050 2,125 Orders $277.67
Product Designs $644,950 325 Designs $1,984.46
Cyclone Tailgaters Activity Overhead Rate Allocated Overhead
Customer orders 20 $277.67 $5,553.40
Product designs 5 $1,984.46 $9,922.30
Total overhead costs allocated to Cyclone $15,475.70
