The following is taken from Clausen Company’s internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor hours, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of indirect labor allocated to Dept. 2 using activity-based costing. Direct Labor Hours Machine Hours Operating Dept. 1 1,020 9,600 Operating Dept. 2 2,380 6,400 Totals 3,400 16,000 Factory overhead costs Rent and utilities $22,900 Indirect labor 18,500 Depreciation - Equipment 15,600 Total factory overhead $57,000 The following is taken from Clausen Company's internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor hours,and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of indirect labor allocated to Dept. 2 using activity-basedcosting.Direct LaborMachineHoursHoursOperating Dept. 1Operating Dept. 21,0209,6002,3806,400Totals3,40016,000Factory overhead costsRent and utilities$22,900Indirect labor18,500DepreciationEquipment15,600Total factory overhead$57,000 Multiple Choice$13,740.$9,360.$12,950.$9,160.$5,550.

Answer) Calculation of Indirect Labor cost allocated to Department 2 using Activity Based Costing Indirect labor cost allocated to Department 2 = Direct labor hours worked in Department 2 X Activity rate per direct labor hour = 2,380 direct labor hours X $ 5.4412 per direct labor hour = $ 12,950 Therefore, indirect labor cost allocated to Department 2 is $ 12,950. Working Note: Calculation of Activity rate for Department 2 based on Direct Labor hours Activity rate = Budgeted Indirect Labor cost/ Budgeted Direct labors of both departments = $ 18,500/ 3,400 direct labor hours = $ 5.4412 per direct labor hours

Answered: he following is taken from Clausen…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following is taken from Clausen Company’s internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor hours, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of indirect labor allocated to Dept. 2 using activity-based costing.

	Direct Labor Hours		Machine Hours
Operating Dept. 1		1,020			9,600
Operating Dept. 2		2,380			6,400
Totals		3,400			16,000

Factory overhead costs
Rent and utilities				$	22,900
Indirect labor					18,500
Depreciation - Equipment					15,600
Total factory overhead				$	57,000

Multiple Choice
$13,740.
$9,360.
$12,950.
$9,160.
$5,550.

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