Glass Creations Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people and the Finishing Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Etching Department are budgeted at $400,000, and the Finishing Department costs are budgeted at $640,000. Two service departments, Maintenance and Computing, directly support the two production departments. These service departments have budgeted costs of $96,000 and $500,000, respectively. The production departments overhead rates cannot be determined until the service departments costs are allocated. The following schedule reflects the use of the Maintenance Departments and Computing Departments output by the various departments.

Using Department
Service Department	Maintenance		Computing		Etching		Finishing
Maintenance (maintenance hours)	0		1,000		1,000		8,000
Computing (minutes)	240,000		0		840,000		120,000

1.

Use the reciprocal-services method to allocate service department costs. Calculate the overhead rates per direct-labor hour for the Etching Department and the Finishing Department.

	service dept.	service dept.	production dept.	production dept.
	maintence	computing	etching	finishing
traceable costs
allocation of maintence dept. costs
allocation of computing dept. costs
total service dept. costs allocated
overhead costs traceable to production departments
total overhead costs
direct labor hours
overhead rate per hour