Assume that X Company has decided to switch to a departmental allocation system. It has two departments and will use direct labor hours as the cost driver in Department 1 and machine hours as the cost driver in Department 2. The following are budgeted costs and driver amounts for these two departments in 2015:
|
Department 1 |
Department 2 |
| Overhead |
$80,000 |
$48,000 |
| Direct labor |
$680,000 |
$850,000 |
| Direct labor hours |
40,000 |
50,000 |
| Machine hours |
120,000 |
130,000 |
Assume the following information for Product 1 in 2015:
|
Department 1 |
Department 2 |
| Direct labor |
$13,566 |
$1,802 |
| Direct labor hours |
798 |
106 |
| Machine hours |
1,010 |
880 |
Using the departmental allocation system, how much overhead was allocated to Product 1 (round overhead rate(s) to the nearest cent and your final answer to the nearest dollar)?