Need help **Cost Allocation Using Activity-Based Costing (ABC) at Allen Company**Allen Company has three departments – Lawn, Bush, and Plowing. Allen Company uses Activity-Based Costing (ABC) for the allocation of its three office costs (labor, gas, invoices) among these departments. Below is a breakdown of the office costs and their allocation based on activity-cost drivers:**Office Costs and Activity-Cost Drivers**| Activities | Total Costs | Activity-cost drivers ||------------|-------------|------------------------|| Labor | $320,000 | 8,000 hours || Gas | $36,000 | 6,000 gallons || Invoices | $40,000 | 2,500 invoices || **Total costs** | **$396,000** | |The activities used by each of the three departments are as follows:**Activity Usage by Department**| | Lawn Department | Bush Department | Plowing Department ||------------------|-----------------|-----------------|--------------------|| Labor | 2,500 hours | 1,200 hours | 4,300 hours || Gas | 1,700 gallons | 800 gallons | 3,500 gallons || Invoices | 1,600 invoices | 400 invoices | 500 invoices |**Calculation Example:**To determine how much of the labor cost will be assigned to the Bush Department, you can use the following formula:\[ \text{Allocated Cost} = \left( \frac{\text{Department's Activity Usage}}{\text{Total Activity Usage}} \right) \times \text{Total Cost} \]For labor costs assigned to the Bush Department:1. Total labor hours for all departments = 8,000 hours2. Labor hours for the Bush Department = 1,200 hours3. Total labor cost = $320,000\[ \text{Bush Department Labor Cost} = \left( \frac{1,200 \text{ hours}}{8,000 \text{ hours}} \right) \times $320,000 = 0.15 \times $320,000 = $48,000 \]Therefore, $48,000 of the labor cost will be assigned to the Bush Department.**Example of Answer Format:**When inputting your answer, use numerical value without any commas,

The question is based on the concept of Cost AccountingIn order to calculate the labor cost assigned…

Allen Company has three departments - Lawn, Bush, and Plowing. Allen Company uses ABC for the allocation of its three office costs gas, invoices) among the three departments. The following information is provided about the office costs: Activities Labor Gas Total Costs $320,000 $36,000 Invoices $40,000 Total costs $396,000 Activity-cost drivers 8,000 hours 6,000 gallons 2,500 invoices The above activities used by their three departments are:

Allen Company has three departments - Lawn, Bush, and Plowing. Allen Company uses ABC for the allocation of its three office costs gas, invoices) among the three departments. The following information is provided about the office costs: Activities Labor Gas Total Costs $320,000 $36,000 Invoices $40,000 Total costs $396,000 Activity-cost drivers 8,000 hours 6,000 gallons 2,500 invoices The above activities used by their three departments are:

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 8E

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