A company estimates that it will incur $3510000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200000 packaging transactions, and 2000 tests per year in producing 400000 drums of product Oil and 600000 drums of product Sludge. The following data are available: Activity Cost Pool Estimated Use of Driver Estimated Overhead Processing Packaging Testing 800 200000 2000 $1740000 1170000 600000

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Chapter1: Financial Statements And Business Decisions
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9. A company estimates that it will incur…
A company estimates that it will incur $3510000 of overhead each year in three departments: Processing, Packaging, and Testing. The
company performs 800 processing transactions, 200000 packaging transactions, and 2000 tests per year in producing 400000 drums
of product Oil and 600000 drums of product Sludge. The following data are available:
Activity Cost Pool Estimated Use of Driver Estimated Overhead
Processing
Packaging
Testing
800
Oil
200000
O $1834500.
O $1050000.
O $1755000.
O $1675500.
2000
Production information for the two products is as follows:
300
120000
$1740000
Activity Cost Pool Estimated Use of Driver Estimated Use of Driver
Processing
Packaging
Testing
1600
The amount of overhead assigned to Oil using ABC is
1170000
600000
Sludge
500
80000
400
Transcribed Image Text:A company estimates that it will incur $3510000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200000 packaging transactions, and 2000 tests per year in producing 400000 drums of product Oil and 600000 drums of product Sludge. The following data are available: Activity Cost Pool Estimated Use of Driver Estimated Overhead Processing Packaging Testing 800 Oil 200000 O $1834500. O $1050000. O $1755000. O $1675500. 2000 Production information for the two products is as follows: 300 120000 $1740000 Activity Cost Pool Estimated Use of Driver Estimated Use of Driver Processing Packaging Testing 1600 The amount of overhead assigned to Oil using ABC is 1170000 600000 Sludge 500 80000 400
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