Determine the overhead application rates for the producing departments using each of the three allocation methods: 1. Direct allocation method for the support departments 2. Step allocation method for the support departments 3. Reciprocal allocation method for the support departments
A Company has two support departments (Administration and Janitorial) and three producing departments (Fabricating, Assembly, and Finishing). Costs and activities are as follows: Administration Janitorial Fabricating Assembly Finishing Direct costs........................ $50,000 $30,000 $40,000 $50,000 $25,000 Number of employees....... 10 30 40 20 Square feet........................ 2,000 10,000 28,000 15,000 Direct labor hours.............. 5,000 6,000 2,000
Administrative services are allocated based on the number of employees; janitorial services are allocated based on square footage. Overhead rates for the three producing departments are based on direct labor hours.
Required: Determine the overhead application rates for the producing departments using each of the three allocation methods:
1. Direct allocation method for the support departments
2. Step allocation method for the support departments
3. Reciprocal allocation method for the support departments
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![Practical Management Science](https://www.bartleby.com/isbn_cover_images/9781337406659/9781337406659_smallCoverImage.gif)
![Operations Management](https://www.bartleby.com/isbn_cover_images/9781259667473/9781259667473_smallCoverImage.gif)
![Operations and Supply Chain Management (Mcgraw-hi…](https://www.bartleby.com/isbn_cover_images/9781259666100/9781259666100_smallCoverImage.gif)
![Practical Management Science](https://www.bartleby.com/isbn_cover_images/9781337406659/9781337406659_smallCoverImage.gif)
![Operations Management](https://www.bartleby.com/isbn_cover_images/9781259667473/9781259667473_smallCoverImage.gif)
![Operations and Supply Chain Management (Mcgraw-hi…](https://www.bartleby.com/isbn_cover_images/9781259666100/9781259666100_smallCoverImage.gif)
![Business in Action](https://www.bartleby.com/isbn_cover_images/9780135198100/9780135198100_smallCoverImage.gif)
![Purchasing and Supply Chain Management](https://www.bartleby.com/isbn_cover_images/9781285869681/9781285869681_smallCoverImage.gif)
![Production and Operations Analysis, Seventh Editi…](https://www.bartleby.com/isbn_cover_images/9781478623069/9781478623069_smallCoverImage.gif)