P7.39 LO 7.10 Reciprocal services method; departmental overhead rates; product costing: manufacturer Refer to the data given in Problem P7.38 for Opticon. Required 1.

(a) Calculate the overhead rates per machine hour for the moulding department and per direct labour hour for the assembly department. Use the reciprocal services method to allocate support department costs.

(b) Now estimate the overhead cost of the doodad. 2. Which of the three methods of support department cost allocation results in the most accurate overhead rates and product costs? Why?