Blitzer Enterprises has identified three cost pools and three corresponding cost drivers to allocate overhead costs. The following estimates are provided for the coming year
Cost Pool Overhead Costs Cost driver Activity level
- Supervision of direct labor $480,000 Direct labor-hours 800,000
- Machine maintenance $220,000 Machine-hours 550,000
- Facility rent $260,000 Square feet of area 100,000
- Total overhead costs $960,000
The accounting records show the Gergen Job consumed the following resources:
- Cost driver Actual level
- Direct labor-hours 600
- Machine-hours 2,100
- Square feet of area 90
1. If direct labor-hours are considered as the only overhead cost driver, what is the single cost driver rate for Blitzer Enterprises?
A) $0.60 per direct labor-hour
B) $0.80 per direct labor-hour
C) $1.20 per direct labor-hour
D) $6.00 per direct labor-hour
2. Using direct labor-hours as the only overhead cost driver, what is the amount of overhead costs allocated to the Gergen Job?
A) $320
B) $720
C) $1,200
D) $1,360