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

question 19

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 overhead allocated to Dept. 2 using activity-based costing. $$\begin{array} { l c c } & \text { Direct Labor Hours } & \text { Machine Hours } \\\text { Operating Dept. 1 } & 980 & 9,200 \\\text { Operating Dept. 2 } & 2,100 & 6,000 \\\text { Totals } & 3,080 & 15,200 \\ & & \\\text { Factory overhead costs } & & \\\text { Rent and utilities } & & \$ 21,700 \\\text { Indirect labor } & & 17,300\\\text { Depreciation - Equipment } & &14,000 \\\end{array}$$ Total factory overhead $ 53,000

• A) $11,795.
• B) $14,092.
• C) $25,887.
• D) $27,112.
• E) $26,500.

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Definitions:

Conditioned Stimulus

Refers to a previously neutral stimulus that, after becoming associated with an unconditioned stimulus, eventually triggers a conditioned response.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without prior conditioning.

Backward Procedure

A method or process that starts with the conclusion or outcome and works backward to determine the necessary steps or causes.

Contingency

A future event or circumstance that is possible but cannot be predicted with certainty.