Accounting 201

Accounting 201

Farmington Company incurred the following indirect costs in March:
Indirect labor cost $30,000
Depreciation expense on equipment 40,000
Marketing expense 25,000
Data for cost allocation is as follows:
Departments
A B C
Sales revenue $50,000 $40,000 $30,000
Indirect labor hours 300 200 600
Machine hours 350 450 200
Building-square feet 9,000 10,000 6,000
Indirect labor is allocated to the three departments based on indirect labor hours. Depreciation expense is allocated to departments based on machine hours. Marketing expense is allocated to departments in proportion to sales.

Accounting 201

 

Refer to Case 22.6. What is the amount of indirect labor cost allocated to Department B?
A) $10,000
B) $13,500
C) $5,455
D) none of the above

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