1. ABC PE 4 Provides most information for utilities cost—buildings
1. What is the best cost driver for overhead cost related to the utilities portion?
a. Number of buildings
b. Number of vehicles
c. Number of square footage of each building
Provides most information for utilities cost—buildings
can be different sizes
2. Which of the following are the cost objects for allocating overhead costs?
a. Units
b. Vehicles
c. Buildings
Cost Object = The product, service, or object that created the costs

2. = $327,678 is the cost for Company A = $42.01 per Sq Ft
3. What is the allocation rate assuming all
costs are allocated based on building
square footage?
a. $63.76 per square foot
b. $6.48 per square foot
c. $42.01 per square foot
Step 1- first find all costs
Building Maintenance costs- $350,000 for labor and $65,000 for materials and equipment.
= $350,000 + $65,000= $415,000
Grounds upkeep- $100,000 for labor, $30,000 for equipment maintenance and $50,000 for supplies.
=$100,000 +$30,000 + $50,000= $180,000
4. Using the rate that you found in
question 3, how much would the cost be for
Unit B?
a. $256,261
b. $327,678
c. $231,055
Utility costs= $220,000
Total costs =   =$815,000
Step 2- find total square feet for all the buildings
Unit A = 6,100 Total Sq Ft
Unit B = 7,800 total sq ft
Unit C = 5,500 Total Sq Ft
Total Square feet = = 19,400 Total Sq Ft
Step 3- Allocation rate (slide 21 from class)
Step 4- Unit B has 7,800 SQ FT
= Total Cost pool / Total # Driver Units
The allocation rate is $42.01 per Sq ft
= Total Costs / Total Sq Ft
=7,800 SQ Ft * $42.01 per Sq ft=
= $815,000 / 19,400 Total Sq Ft
= $327,678 is the cost for Company A
= $42.01 per Sq Ft

3. =$169,765 close enough (rounding)
5. What is the amount of the total
overhead cost for Unit B assuming
all cost are allocated based on using the
number of buildings?
a. $305,622
b. $169,790
c. $339,580
Step 1- first find all costs (Cost Pool)
Building Maintenance costs- $350,000 for labor and $65,000 for materials and equipment.
= $350,000 + $65,000= $415,000
Grounds upkeep- $100,000 for labor, $30,000 for equipment maintenance and $50,000 for supplies.
=$100,000 +$30,000 + $50,000= $180,000
Utility costs= $220,000
Total costs =   =$815,000
Step 2- find the total number of buildings (Driver units)
Unit A bldgs
Unit B bldgs
Unit C bldgs
Total Number of Buildings = = 24 bldgs
Step 3- Allocation rate = (slide 21 from class)
Total Cost pool / Total # Driver Units
Step 3 alternate solution (proportion method) –
(slide 21 from class)
Total Costs / Total number of bldgs
Proportion method =
= $815,000 / 24 bldgs
= # of Driver units used / total # of driver units
= $33,958 per bldg.
= 5 bldgs / 24 bldgs
=0.2083= Proportion rate for Unit B
Unit B = 5 bldgs
= $33,958 per bldg. * 5 bldgs = $169,790
= * Total cost
= * $815,000
=$169,765 close enough (rounding)