7-8. Using the information from 7-7

Reciprocal Method 7-7 102 Kumar Company has two producing departments and two support centers. The following budgeted data pertain to these four departments: Support Departments Maintenance Personnel $200,000 $60,000 2,700 Overhead Square footage Number of employees Direct labor hours Producing Departments Assembly Painting $43,000 $74,000 5,400 5,400 198 25,000 40,000 30 72 Required: 1. Allocate the overhead costs of the support departments to the producing depart- ments using the reciprocal method. Bases for allocation are: maintenancesquare footage, personnel number of employees. (Round to the nearest dollar.) 2. Using direct labor hours, compute departmental overhead rates for the two produc- ing departments. (Round to the nearest cent.) Direct Method 7-8 102 Refer to the data in Exercise 7-7. The company has decided to simplify its method of allocating support service costs by switching to the direct method. Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. 2. Using direct labor hours, compute departmental overhead rates for the two produc ing departments