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he Western MountainWesternMountain Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: LOADING... (Click the icon to view the department overhead

he

Western MountainWesternMountain

Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows:

LOADING...

(Click

the icon to view the department overhead budgets.)

Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. These rates are developed after support-department costs are allocated to operating departments. Bases for allocation are to be selected from the following:

LOADING...

(Click

the icon to view the data.)

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requirements

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Part 1

Requirement 1. Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate.

Begin by selecting the allocation base for each support department.

Support Department Allocation Base
Building and grounds Square feet of floor space occupied
Personnel Number of employees
General plant administration Manufacturing labor-hours
Cafeteria: operating loss Number of employees
Storeroom Number of requisitions

Part 2

Using the step-down method, allocate support-department costs. Allocate the costs of the support departments in the order given in this problem. (Round all indirect allocation rates to the nearest cent and all other computations to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs.)

Support Departments Operating Departments
General Cafeteria
Bldg and Plant Operating
Grounds Personnel Admin. Loss Storeroom Machining Assembly
Costs incurred 45000 675 30870 810 8864 36600 48000
Allocation of costs:
Building and grounds 45000 225 2700 1800 360 14400 25515
Personnel (900) 180 90 36 360 234
General plant administration (33750
Cafeteria

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