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

question 10

Multiple Choice

The following is taken from Ames Company's internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor costs, 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.

• A) $18,720.
• B) $12,930.
• C) $13,400.
• D) $19,190.
• E) $19,440.

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Definitions:

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor costs.

Materials And Labor

The primary components of manufacturing costs, representing the raw materials and workforce expenses directly involved in production.

Prime Costs

The sum of direct materials and direct labor expenses directly involved in the manufacturing of a product.

Direct Materials

Raw materials that can be directly attributed to the production of goods, forming a significant part of the finished product.