Departmental Distribution of Estimated Overhead—Step Method; Rate Calculation. The president of Orange Products Company has been critical of the product costing methods by which factory overhead is charged to products by a plantwide overhead rate. The chief accountant suggested a departmentalization of the factory for the purpose of calculating departmental factory overhead rates. The following estimated direct departmental overhead data were accumulated on an annual basis:

Producing Departments Service Departments Overhead Items Supervision.

Indirect labor.

Indirect supplies.

Labor fringe benefits.

Equipment depreciation ... Property tax, depreciation of buildings, etc.

Total.

Department 10 Departments

$20,500

$16,000 5,400 6,000 4,850 5,600 6,872 9,349 6,000 8,000

$43,622

$44,949 Department 14 Storeroom

$14,000

$ 7,200 8,000 6,133 5,430 1,400 10,145 640 10,000 560

$47,575

$15,933 Repairs and Maintenance General Factory Cost Pool

$ 8,000

$24,000 7,200 18,000 3,651 1,070 760 2,100 1,740 1,100 20,000

$21,351

$66,270 The annual light and power bill is estimated at $9,300 and is allocated on the basis of electricity usage. The order and bases of distribution of service department costs (using the step method) are as follows:

(a) General Factory Cost Pool—area occupied

(b) Storeroom—estimated requisitions

(c) Repairs and Maintenance—estimated repairs and maintenance hours The following departmental infonnation is provided:

Department 10 Department 12 Department 14 Storeroom Repairs and Maintenance General Factory Cost Pool Percentage of usage of electricity.

20%

25%

30%

3%

12%

10%

Area occupied (square feet)..

21,000 25,200 29,400 3,360 5,040 2,000 Estimated number of requisitions.

124,200 81,000 40,500

—

24,300 6,000 Estimated number of repairs and maintenance hours.

4,800 4,200 6,000 3,000

—

1,000 Estimated machine hours.

800 900 800

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—

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Required: Prepare a factory overhead distribution sheet, with calculation of overhead rates for the producing departments based on machine hours.