Melting Molding
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Indirect Cost Allocation: Direct Method
Sprint Manufacturing Company has two production departments, Melting and Molding. Direct general plant management and plant security costs benefit both production departments. Sprint allocates general plant management costs on the basis of the number of production employees and plant security costs on the basis of space occupied by the production departments. In November, the following
|
Melting Department overhead |
$110,000 |
|
Molding Department overhead |
400,000 |
|
General plant management |
100,000 |
|
Plant security |
50,000 |
Other pertinent data follow:
|
|
Melting |
Molding |
|
Number of employees |
35 |
40 |
|
Space occupied (square feet) |
10,000 |
20,000 |
|
Machine hours |
10,000 |
2,000 |
|
Direct labor hours |
4,000 |
20,000 |
a. Prepare a schedule allocating general plant management costs and plant security costs to the Meltingand Molding Departments.
|
Department |
Total |
Melting |
Molding |
|
General Plant Management |
|
|
|
|
Plant security |
|
|
|
b.
- Determine the total departmental overhead costs for the Melting and Molding Departments.Use rounded answers to compute total departmental overhead costs for each department.
Melting $
0
Molding $
0
c.
- Assuming the Melting Department uses machine hours and the Molding Department uses direct laborhours to apply overhead to production, calculate the overhead rate for each production department. Use rounded answers to compute and then round final answers to two decimal places.
Melting $
0
Molding $
0
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