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31 March, 23:21

Nile Corp. has identified three cost pools 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 $304,000 Direct labor-hours 760,000 Machine maintenance $153,600 Machine-hours 960,000 Facility rent $165,000 Square feet of area 110,000 Total overhead costs $622,600 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor-hours 260 Machine-hours 1,500 Square feet of area 70 Using the three cost pools to allocate overhead costs, what is the total amount of overhead costs to be allocated to the Mossman Job

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  1. 1 April, 00:18
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    Overheads cost allocated to Mossman Job = $449

    Explanation:

    We have been provided the cost of each activity and their respective drivers.

    There are three activities

    Supervision of Direct Labor = $304,000 for 760,000 labor hours

    Machine Maintenance = $153,600 for 960,000 hours

    Facility rent = $165,000 for 110,000 square feet

    Activities of Mossman Job and respective costs will be as follows:

    Supervision of Direct Labor = $304,000/760,000 X 260 labor hours = $104

    Machine Maintenance = $153,600/960,000 X 1,500 = $240

    Facility Rent = $165,000/110,000 X 70 = $105

    Net Overheads cost allocated to Mossman Job = $104 + $240 + $105 = $449
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