ACCT&203 Unit 2 - Overhead Allocation and Activity-Based Costing Problem 1 - Overhead Allocation The RTC Manufacturing Company produces a variety of goods for sale. The company is divided into seven departments. During the current month, the following factory overhead costs were incurred by each of the departments. Total Department Factory Overhead per Factory Overhead Analysis Sheets SERVICE DEPARTMENTS Department Overhead Amount Power $190,645 Maintenance $175,450 PRODUCING DEPARTMENTS Department Overhead Amount Fabrication $157,658 Assembly $138,405 Finishing $167,875 Inspection $ 35.986 Personnel $61,600 * Each service department serves ALL other departments. The Bases for Allocation of Service Department Costs are: Power Department Maintenance Department Personnel Department Kilowatt hours used Square Feet of Floor Space Number of Employees The following selected information was taken from company records: Department Kilowatt Hours Used Square Feet Number of Employees 10 1,200 Power Maintenance Personnel Fabrication Assembly Finishing Inspection 8,000 5,000 5,000 12,000 18,000 14,000 5,000 1,000 800 1,800 1,000 1,100 8 2 5 00 UN 11 8 1,000 4 Required: 1. Using Excel, prepare a worksheet to prorate the Service Department Costs to the Producing Departments using the Step Method. Use the format from class as a guide to setting up your worksheet. 2. Round all percentages to 4 decimal places, (.1234 = 12.34%). Make sure the total of the percentages add up to exactly 100%. Assign any rounding error to the department with the highest percentage. 3. Prepare the required general journal entries on a separate worksheet to allocate the service department overhead costs to the producing departments. B D E F G H Allocation Base Allocation Rate Service Departments General Factory Maintenance Producing Departments Cutting Assembly Finishing Total 1 2 3 Description 4 Total Overhead 5 6 Allocate General Factory 7 8 9 10 11 12 13 Allocate Maintenance 14 15 16 17 18 19 Total