The company is an advertising agency. The company uses an activity-based costing system to allocate overhead costs to its services. Information about the company's activity cost pool rates follows: Activity cost pool Activity rate Clerical costs 16 per administrative assistant hour Legal filing fees 145 per hour of partner time Client meeting time 50 per report Stooge Company was a client of the company. Recently, 5 administrative assistant hours, 3 new ad campaigns, and 10 meeting hours were incurred for the Stooge Company account. Using the activity-based costing system, how much overhead cost would be allocated to the Stooge Company account?
The company is an advertising agency. The company uses an activity-based costing system to allocate overhead costs to its services. Information about the company's activity cost pool rates follows: Activity cost pool Activity rate Clerical costs 16 per administrative assistant hour Legal filing fees 145 per hour of partner time Client meeting time 50 per report Stooge Company was a client of the company. Recently, 5 administrative assistant hours, 3 new ad campaigns, and 10 meeting hours were incurred for the Stooge Company account. Using the activity-based costing system, how much overhead cost would be allocated to the Stooge Company account?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The company is an advertising agency. The company uses an activity-based costing system to allocate overhead costs to its services. Information about the company's activity cost pool rates follows: Activity cost pool Activity rate Clerical costs 16 per administrative assistant hour Legal filing fees 145 per hour of partner time Client meeting time 50 per report Stooge Company was a client of the company. Recently, 5 administrative assistant hours, 3 new ad campaigns, and 10 meeting hours were incurred for the Stooge Company account. Using the activity-based costing system, how much overhead cost would be allocated to the Stooge Company account?
Expert Solution
Step 1
Overhead costs are the kind of fixed expenses incurred for operating a business. In other words, Overhead cost is called as indirect costs
Example of overhead cost
- accounting fees,
- insurance,
- legal fees,
- rent,
- taxes,
- repairs and supplies, utilities
- telephone bills.
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