The Following Is Taken from Clausen Company's Internal Records of Its

question 31

Multiple Choice

The following is taken from Clausen Company's internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor hours, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of rent, utilities, and depreciation allocated to Dept. 1 using activity-based costing. $$\begin{array} { l c r } & \text { Direct Labor Hours } & \text { Machine Hours } \\\text { Operating Dept. 1 } & 980 & 9,200 \\\text { Operating Dept. 2 } & 2,100 & 6,000 \\\text { Totals } & 3,080 & 15,200 \\\\\text { Factory overhead costs } & & \\\text { Rent and utilities } & & \$ 21,700 \\\text { Indirect labor } & & 17,300 \\\text { Depreciation - Equipment } & & 14,000\end{array}$$ Total factory overhead $ 53,000

• A) $21,608.
• B) $11,795.
• C) $13,134.
• D) $14,092.
• E) $5,505.

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Definitions:

Actuarial Present Value

A calculation used to determine the present value of a future series of payments or receipts, taking into account variables such as mortality, investment earnings, and expense risks.

Net Periodic Pension Cost

The net periodic pension cost is the total expense recognized in a period related to an employer's pension plan, including service costs, interest costs, expected returns on plan assets, and any amortizations.

Employer's Contribution

A payment made by an employer into a fund, pension plan, or insurance for the benefit of the employee.

Pension Expense

The annual cost recognized by an employer for its pension plan, which includes service costs, interest costs, expected returns on plan assets, and gains or losses.