1. ABC PE 1 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. = $4.88 per Sq Ft 3. What is the allocation rate assuming all
costs are allocated based on building
square footage?
a. $1.76 per square foot
b. $4.88 per square foot
c. $3.71 per square foot
Step 1- first find all costs
Building Maintenance costs- $350,000 for labor and $55,000 for materials and equipment.
= $350,000 + $55,000= $405,000
Grounds upkeep- $170,000 for labor, $30,000 for equipment maintenance and $50,000 for supplies.
=$170,000 +$30,000 + $50,000= $250,000
Utility costs= $150,000
Total costs =   =$805,000
Step 2- find total square feet for all the buildings
Company A bldgs * 6,250 sq ft / bldg. = 50,000 Total Sq Ft
Company B bldgs * 7,856 sq ft / bldg. = 54,999 Total Sq Ft
Company C bldgs * 5,000 sq Ft / bldg. = 60,000 Total Sq Ft
Total Square feet = = 164,999 Total Sq Ft
Step 3- Allocation rate (slide 21 from class)
= Total Cost pool / Total # Driver Units
= Total Costs / Total Sq Ft
= $805,000 / 164,999 Total Sq Ft
= $4.88 per Sq Ft

3. =$208,704 close enough = $29,815 per bldg.
4. What is the amount of the total
overhead cost for Company B assuming
all cost are allocated based on the rate
method using number of buildings?
a. $205,999
b. $176,000
c. $208,705
Step 1- first find all costs (Cost Pool)
Building Maintenance costs- $350,000 for labor and $55,000 for materials and equipment.
= $350,000 + $55,000= $405,000
Grounds upkeep- $170,000 for labor, $30,000 for equipment maintenance and $50,000 for supplies.
=$170,000 +$30,000 + $50,000= $250,000
Utility costs= $150,000
Total costs =   =$805,000
Step 2- find the total number of buildings (Driver units)
Company A bldgs
Company B bldgs
Company C bldgs
Total Number of Buildings = = 27 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 =
= $805,000 / 27 bldgs
= # of Driver units used / total # of driver units
= $29,815 per bldg.
= 7 bldgs / 27 bldgs
= = Proportion rate for Company B
Company B= 7 bldgs
= $29,815 per bldg. * 7 bldgs. = $208,705
= * Total cost
= * $805,000
=$208,704 close enough