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Required information [The following information applies to the questions displayed below.) Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its
Required information [The following information applies to the questions displayed below.) Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, 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 production-related overhead costs for the Etching Department are budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service departments, Maintenance and Computing, directly support the two production departments. These service departments have budgeted costs of $48,000 and $250,000, 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 Departments and Computing Department's output by the various departments. Maintenance Service Department Maintenance (maintenance hours) Computing (minutes) Using Department Computing Etching 1,000 1,000 840,000 Finishing 8,000 120,000 240,000 2. Use the step-down method to allocate service department costs. Allocate the Computing Department's costs first. Calculate the overhead rates per direct-labor hour for the Etching Department and the Finishing Department. (Do not round intermediate calculations. Round "Overhead rate per hour" to 3 decimal places and other answers to the nearest dollar amount.) Answer is not complete. Production Departments Etching Finishing Service Departments Computing Maintenance $ 250,000 $ 48,000 $ 250,000 (48,000) 0 $ 218,750 $ 5,333 $ 224,083 $ 31,250 42,667 73,917 Costs prior to allocation Allocation of Computing Department costs Allocation of Maintenance Department costs Total service department cost allocated Overhead costs traceable to production departments Total overhead cost Direct-labor hours (DLH) Overhead rate per hour $ 224,083 $ 40,000 $ 10.600 $ 73,917 160,000 2.460 %
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