Part B - Question 2 Use the following information to answer the questions below ( 10 marks available). Shreshtha Art Company is developing overhead rates based on direct-labor hours for two production department, 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 productionrelated overhead costs for the Etching Department are budgeted at $100,000 and the Finishing Department costs are budgeted at $160,000. 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 Department's and Computing Department's output by the various departments. Use the step-down method to allocate service department costs. Allocate the Computing Department's costs first. (5 marks available) determined until the service departments' costs are allocated. The following schedule reflects the use of the Maintenance Department's and Computing Department's output by the various departments. Part B - Question 2A Use the direct method to allocate service department costs. ( 5 marks available) Part B - Question 2 Use the following information to answer the questions below ( 10 marks available). Shreshtha Art Company is developing overhead rates based on direct-labor hours for two production department, 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 productionrelated overhead costs for the Etching Department are budgeted at $100,000 and the Finishing Department costs are budgeted at $160,000. 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 Department's and Computing Department's output by the various departments. Use the step-down method to allocate service department costs. Allocate the Computing Department's costs first. (5 marks available) determined until the service departments' costs are allocated. The following schedule reflects the use of the Maintenance Department's and Computing Department's output by the various departments. Part B - Question 2A Use the direct method to allocate service department costs. ( 5 marks available)
