Answer the following questions using the information below:
Marpole Enterprises has identified three cost pools to allocate overhead costs.The following estimates are provided for the coming year:
The accounting records show the Bossman Job consumed the following resources:

-If Marpole Enterprises uses a simple cost system based on direct labour hours then what amount of indirect costs will be allocated to the Bossman job?
A)$85
B)$240
C)$180
D)$160
E)$80

Question

Answer the following questions using the information below:
Marpole Enterprises has identified three cost pools to allocate overhead costs.The following estimates are provided for the coming year:
  The accounting records show the Bossman Job consumed the following resources:
 
-If Marpole Enterprises uses a simple cost system based on direct labour hours then what amount of indirect costs will be allocated to the Bossman job?
A)$85 
B)$240 
C)$180 
D)$160 
E)$80

Quizplus · Accepted Answer

The total indirect cost is $540 ($360 + $120 + $60). 
The total direct labour hours for all jobs is 600 (200 + 300 + 100). 
The indirect cost allocation rate is $0.90 per direct labour hour ($540/600).
The Bossman job used 200 direct labour hours, therefore, the indirect cost allocated to the Bossman job is 200 x $0.90 = $180.

Answer the Following Questions Using the Information Below