Question - The following is taken from Ronda Co.'s internal records of its factory with two production departments. The cost driver for indirect labor and supplies is direct labor costs, and the cost driver for the remaining overhead items is number of hours of machine use.
Direct Labor Machine Use Hours Department 1 $18,800 2,000 Department 2 13,200 1,200 Totals $32,000 3,200 Factory overhead costs Rent and utilities $12,200 Indirect labor 5,400 General office expense 4,000 Depreciation-Equipment 3,000 Supplies 2,600 Total factory overhead $27,200
Compute the total amount of overhead cost allocated to Department 1 using activity-based costing.