Indirect Cost Allocation: Direct Method

Sprint Manufacturing Company has two production departments, Melting and Molding. Direct general plant management and plant security costs benefit both production departments. Sprint allocates general plant management costs on the basis of the number of production employees and plant security costs on the basis of space occupied by the production departments. In November, the following overhead costs were recorded:

Melting Department direct overhead$180,000Molding Department direct overhead400,000General plant management100,000Plant security35,000

Other pertinent data follow:

MeltingMoldingNumber of employees3055Space occupied (square feet)10,00030,000Machine hours10,0002,000Direct labor hours4,00020,000

(a) make a schedule allocating general plant management costs and plant security costs to the Melting and Molding Departments.

Instructions:Do not round computations until you final answers. The, round your answer to the nearest whole number.

DepartmentTotalMeltingMoldingGeneral Plant ManagementAnswer

Answer

Answer

Plant securityAnswer

Answer

Answer

(b) Determine the total departmental overhead costs for the Melting and Molding Departments.

Use rounded answers to compute total departmental overhead costs for each department.

Melting $Answer

Molding $Answer

(c) Assuming the Melting Department uses machine hours and the Molding Department uses direct labor hours to apply overhead to production, calculate the overhead rate for each production department.

Use rounded answers to compute and then round final answers to two decimal places.

Melting $Answer

Molding $Answer