Copy of Riley's Land Management Company has $27,000 in indirect costs operating her company. She has...

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Accounting

Copy of Riley's Land Management Company has $27,000 in indirectcosts operating her company. She has identified three activitiesthat drive these indirect cost and created three related cost poolsas detailed below:
Activities Costs Cost-drivers
Labor Hours $24,000 1000 hours
Gas $1,800 400 gallons
Invoices $1,200 250 invoices
Total costs $27,000
Riley has three divisions. Each division uses different amountof the cost driving activities as described below.
Department
Lawn
Bush
Plowing
Total
Labor hours (hours)
340
200
?
1000
Gas (gallons)
160
?
40
400
Invoices (invoices)
?
50
40
250
If Riley allocates indirect costs to each division using thethree cost pools above and three allocation rates how much costwill each division be assigned per labor hour worked in thatdivision? (In other words, what would be the allocation rate usedto assign costs that are driven by the number of labor hours?

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Calculation of Activity rates Activity Cost Pool Activity driver Overhead Cost Expected Activity B Activity rate AB Labor hours Number of Hours 2400000 1000 2400 Per Hours Gas Number of Gallons of gas See Answer

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Activities	Costs	Cost-drivers
Labor Hours	$24,000	1000 hours
Gas	$1,800	400 gallons
Invoices	$1,200	250 invoices
Total costs	$27,000

Department	Lawn	Bush	Plowing	Total
Labor hours (hours)	340	200	?	1000
Gas (gallons)	160	?	40	400
Invoices (invoices)	?	50	40	250