Department Personnel Custodial Services Maintenance Printing Binding 1otal Labor- square reet oт Number OT маспале Uirect Labor- Hours Space Occupied Employees Hours Hours 16,700 12,200 20 8,300 3,200 47 14,300 10,300 66 30,300 40,200 109 162,000 15,000 103,000 20,600 304 50,000 76,000 172,600 86,500 546 212,000 91,000 Budgeted overhead costs in each department for the current year are shown below. Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 340,000 65,800 93,000 414,000 165,000 $1,077,800 Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating departments. Required: 1. Using the step-down method, allocate the service department costs to the consuming departments. Then compute predetermined overhead rates in the two operating departments. Use machine-hours as the allocation base in the Printing Department and direct labor-hours as the allocation base in the Binding Department. 2. Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding departments. 3. Assume during the current year the company bids on a job requiring machine and labor time as follows: Printing Department Binding Department Total hours Direct Labor- Machine-Hours 2,600 Hours 1,200 700 3,300 13,500 14,800 a. Calculate the overhead cost assigned to the job if the company used the overhead rates developed in (1) above. Then calculate the overhead cost assigned to the job if the company used the overhead rates developed in (2) above.
Department Personnel Custodial Services Maintenance Printing Binding 1otal Labor- square reet oт Number OT маспале Uirect Labor- Hours Space Occupied Employees Hours Hours 16,700 12,200 20 8,300 3,200 47 14,300 10,300 66 30,300 40,200 109 162,000 15,000 103,000 20,600 304 50,000 76,000 172,600 86,500 546 212,000 91,000 Budgeted overhead costs in each department for the current year are shown below. Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 340,000 65,800 93,000 414,000 165,000 $1,077,800 Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating departments. Required: 1. Using the step-down method, allocate the service department costs to the consuming departments. Then compute predetermined overhead rates in the two operating departments. Use machine-hours as the allocation base in the Printing Department and direct labor-hours as the allocation base in the Binding Department. 2. Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding departments. 3. Assume during the current year the company bids on a job requiring machine and labor time as follows: Printing Department Binding Department Total hours Direct Labor- Machine-Hours 2,600 Hours 1,200 700 3,300 13,500 14,800 a. Calculate the overhead cost assigned to the job if the company used the overhead rates developed in (1) above. Then calculate the overhead cost assigned to the job if the company used the overhead rates developed in (2) above.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Department
Personnel
Custodial Services
Maintenance
Printing
Binding
1otat Lacor- square reet oт
Number Oт
маспале
Uirect Labor-
Hours
Space Occupied
Employees
Hours
Hours
16,700
12,200
20
8,300
3,200
47
14,300.
10,300
66
30,300
40,200
109
162,000
15,000
103,000
20,600
304
50,000
76,000
172,600
86,500
546
212,000
91,000
Budgeted overhead costs in each department for the current year are shown below:
Personnel
Custodial Services
Maintenance
Printing
$340,000
65,800
93,000
414,000
Binding
Total budgeted cost
165,000
$ 1,077,800
Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating
departments.
Required:
1. Using the step-down method, allocate the service department costs to the consuming departments. Then compute predetermined
overhead rates in the two operating departments. Use machine-hours as the allocation base in the Printing Department and direct
labor-hours as the allocation base in the Binding Department.
2. Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding
departments.
3. Assume during the current year the company bids on a job requiring machine and labor time as follows:
Printing Department
Binding Department
Total hours
Machine-Hours
2,600
Direct Labor-
Hours
1,200
700
3,300
13,600
14,800
a. Calculate the overhead cost assigned to the job if the company used the overhead rates developed in (1) above. Then calculate
the overhead cost assigned to the job if the company used the overhead rates developed in (2) above.
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