Figure 4-12 Vaughn, Inc., has identified the following overhead costs and activity drivers for next year:
The following are two of the jobs completed during the year:
The company's normal activity is 2,000 direct labor hours.
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Refer to Figure 4-12.If the four activity drivers are used to allocate overhead costs, total overhead allocated to Job 10A would be
A) $5,533.
B) $4,830.
C) $5,030.
D) $5,630.

Question

Figure 4-12 Vaughn, Inc., has identified the following overhead costs and activity drivers for next year:
 The following are two of the jobs completed during the year:
 The company's normal activity is 2,000 direct labor hours.
-
Refer to Figure 4-12.If the four activity drivers are used to allocate overhead costs, total overhead allocated to Job 10A would be
A) $5,533. 
B) $4,830. 
C) $5,030. 
D) $5,630.

Quizplus · Accepted Answer

First, we need to calculate the predetermined overhead rate using the total estimated overhead and estimated activity level.

Predetermined overhead rate = Total estimated overhead / Estimated activity level 
= ($23,000 + $10,000 + $17,000 + $8,000) / 2,000 direct labor hours 
= $58,000 / 2,000 direct labor hours 
= $29 per direct labor hour

Next, we can use the four activity drivers and their respective usage for each job to allocate overhead costs.

For Job 10A: 
Direct labor hours = 100 
Machine hours = 40 
Number of batches = 10 
Number of setups = 2

Total overhead allocated to Job 10A = ($29 × 100) + ($16 × 40) + ($120 × 10) + ($50 × 2) 
= $2,900 + $640 + $1,200 + $100 
= $4,830

Therefore, the total overhead allocated to Job 10A would be $4,830.