Rabia Company has two support departments, Human Resources and Maintenance, and two producing departments, Fabrication and Assembly The company only had mixed cost. Human Resource costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours. Predetermined overhead rates for fabrication and assembly are based on direct labor hours. Required: 1. Calculate the allocation ratios. 2. Using the direct method, allocate the costs of the Human Resources and Maintenance departments to the Fabrication and Assembly departments. Also write the final cost of both the production departments. 3. What if the Maintenance Department had 50 employees? How would that affect the allocation of Human Resources Department costs to the Fabrication and Assembly departments?
Rabia Company has two support departments, Human Resources and Maintenance, and two producing departments, Fabrication and Assembly
The company only had mixed cost. Human Resource costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours. Predetermined
Required:
1. Calculate the allocation ratios.
2. Using the direct method, allocate the costs of the Human Resources and Maintenance departments to the Fabrication and Assembly departments. Also write the final cost of both the production departments.
3. What if the Maintenance Department had 50 employees? How would that affect the allocation of Human Resources Department costs to the Fabrication and Assembly departments?
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