Kay and Dee Manufacturing (K+D) has five business lines: Repair and Overhead (R+O): Repair of truck transmissions. Manufacturing: manufacturing of custom truck transmission parts Engineering: design of new parts and consulting services Chemical Treating: cleaning of old parts Material Handling: Handling and storage of raw materials used in other business lines They also have three support departments. Major activities of each department are: Human Resources (HR): Payroll, HR staff, employee services, Union/Management relations. Costs for this service department are allocated based on Headcount. Facility: buildings, building maintenance and related building costs. Costs for this service department are allocated based on area occupied. Main Office (HQ): salaries for the President, VP, and Finance department. Costs for this service department are allocated based on HEADCOUNT Financial information is in Appendix A. Other information is in Appendix B. Customer are charged for Direct Labour, Direct Materials, applicable overheads and profit. Overhead rates are based on the following business lines are allocated as follows: Repair and Overhead (R+O): R+O Direct Labour costs Manufacturing: Manufacturing Direct Labour costs Engineering: Engineering Direct Labour costs Chemical Treating: Processing Hours Material Handling: value of materials handled K+D charges profit of 5% on direct material costs and material handling overhead, and 20% on labour and all of the other overhead costs. REQUIRED: 1. Briefly comment on the cost drivers for the support departments. (ie. Do you think they are appropriate, or can you recommend something better?) For part 2, 3 and 4, use this information to calculate the total costs of Job#582 R+O Hours: 25 hours Manufacturing hours: 15 hours Engineering hours: 2 hours Chemical Treating: 1 hour Direct Materials: $4,200 2. Using the Direct Method, what is the cost of Job #582. 3. Using the Step-down method, what is the cost of Job #582. Assume that the step-down method is done in this order: * 1st Building * 2nd HR * 3rd HQ 4. Using the Reciprocal Method, what is the cost of Job #582? Appendix A: FINANCIAL INFORMATION HO HR Building Material Handling Chemical Treating Engineering 4,613,872 4,056,720 145,288 223,096 2,595,565 1.602 38,124 44,483 890 24,568 1,516 15,632 3.400 1,109 10,760 7,130 2 3,936 . 195,105 502,455 158,251 294,225 . . 66.9 Appendix B: Other information Summary Information HR Building Material Handling R+O Manufacturing Chemical Treating Engineering