Vincent Jardine, a CPA, has a firm in the state of New York
Vincent uses ABC to allocate overhead costs and has computed the following predetermined overhead allocation rates:
Activity Allocation Base Allocation Rate
Photocopy expenses Number of pages $0.75 per page
Cost of maintenance Number of labor hours $10.00 per hour
Vincent has important contacts in the northeastern parts of New York. During the past month, Vincent completed a job for Nurix, Inc The job required 135 labor hours and 4,000 photocopies. Determine the amount of indirect costs to be allocated to the job.
What will be an ideal response
Activity Predetermined Overhead Allocation Rate x Actual Quantity of the Allocation Base = Allocated Overhead Cost
Photocopy expenses $0.75 per page x 4,000 pages = $3,000
Cost of Maintenance $10.00 per labor
hour x 135 labor hours = 1,350
Total $4,350
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