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1 (Total 18 marks) Precise Engineering manufactures gauges for the construction industry. The company has two production departments (Assembly and Machining) and two service cost
1 (Total 18 marks) Precise Engineering manufactures gauges for the construction industry. The company has two production departments (Assembly and Machining) and two service cost centres (Maintenance and Computer Support). The estimated overhead costs for each of the departments and the cost drivers for the two production departments are as follows: Assembly Machining Maintenance Computer Support Estimated overhead costs $800,000 $400,000 $230,000 $250,000 Cost drivers 10,000 direct labour hours 30,000 machine hours It has been estimated that each service cost centre does work for other cost centres in the following proportions: Assembly Machining Maintenance Computer Maintenance cost centre to: Computer support cost centre to: 50% 50% - 30% 60% 10% Support Required: (a) (b) Calculate the total overhead costs for the Assembly and Finishing departments after the re-apportionment of the costs from the service departments. (Round your solutions to the nearest dollar.) (15 marks) Calculate the department overhead rates for the Assembly and Finishing departments using the appropriate bases. (Round your solutions to the nearest cent.)
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