If direct labor-hours are considered as the only overhead

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Reference no: EM13599251

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

Reference no: EM13599251

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