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Karen Mason has been asked to develop departmental overhead rates for comparison with the plantwide rate. The following steps are to be followed in developing
Karen Mason has been asked to develop departmental overhead rates for comparison with the plantwide rate. The following steps are to be followed in developing the departmental rates. (Do not round intermediate calculations. Enter all your answers in thousands except "Departmental overhead rate" which should be entered in dollars rounded to 2 decimal places.)
a.
The Maintenance Department costs should be allocated to the three manufacturing departments using the direct method.
b.
The Power Department costs should be allocated to the three manufacturing departments using dual cost allocation combined with the direct method. Fixed costs are to be allocated according to maximum allotted capacity, and variable costs are to be allocated according to planned usage for the coming year.
c.
Calculate departmental overhead rates for the three manufacturing departments using a machine-hour cost driver for the Molding Department and a direct-labor-hour cost driver for the Component and Assembly departments.
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