QUESTION 4

1. THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 1 6.

   Three Company uses a process organized into two service or support departments (Support 1 and Support 2) and two producing departments (Production 1 and Production 2). Budgeted data for the four departments for the month of January are as follows.

   	Support Departments			Producing Departments
   	Support 1	Support 2		Production 1	Production 2
   Overhead	$100,000	$120,000		$90,000	$80,000
   Number of employees		100		300	100
   Machine hours	2,000			4,000	4,000

   Overhead cost for the Support 1 Department is allocated based on number of employees. Overhead cost for the Support 2 Department is allocated based on machine hours.

   Note: Round all calculations to two decimal points and all dollar amounts to the nearest dollar.

   Determine the total overhead cost for Production 2 Department using the sequential method to allocate support department costs, starting with Support 2 Department.

   		$153,000
   		$159,000
   		$154,000
   		$160,000

QUESTION 5

1. THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 1 6.

   Three Company uses a process organized into two service or support departments (Support 1 and Support 2) and two producing departments (Production 1 and Production 2). Budgeted data for the four departments for the month of January are as follows.

   	Support Departments			Producing Departments
   	Support 1	Support 2		Production 1	Production 2
   Overhead	$100,000	$120,000		$90,000	$80,000
   Number of employees		100		300	100
   Machine hours	2,000			4,000	4,000

   Overhead cost for the Support 1 Department is allocated based on number of employees. Overhead cost for the Support 2 Department is allocated based on machine hours.

   Note: Round all calculations to two decimal points and all dollar amounts to the nearest dollar.

   Determine the total overhead cost for Production 1 Department using the reciprocal method to allocate support department costs.

   		$202,000
   		$225,833
   		$198,000
   		$229,167

QUESTION 6

1. THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 1 6.

   Three Company uses a process organized into two service or support departments (Support 1 and Support 2) and two producing departments (Production 1 and Production 2). Budgeted data for the four departments for the month of January are as follows.

   	Support Departments			Producing Departments
   	Support 1	Support 2		Production 1	Production 2
   Overhead	$100,000	$120,000		$90,000	$80,000
   Number of employees		100		300	100
   Machine hours	2,000			4,000	4,000

   Overhead cost for the Support 1 Department is allocated based on number of employees. Overhead cost for the Support 2 Department is allocated based on machine hours.

   Note: Round all calculations to two decimal points and all dollar amounts to the nearest dollar.

   Determine the total overhead cost for Production 2 Department using the reciprocal method to allocate support department costs.

   		$164,166
   		$144,000
   		$160,834
   		$148,000