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Sendai Company has budgeted costs in its various departments as follows for the coming year: Factory Administration Custodial Services Personnel Maintenance Machining-overhead Assembly-overhead Total cost
Sendai Company has budgeted costs in its various departments as follows for the coming year: Factory Administration Custodial Services Personnel Maintenance Machining-overhead Assembly-overhead Total cost $ 270,000 68,760 28,840 45,200 376,300 175,900 $965,000 The company allocates service department costs to other departments in the order listed below. Direct Number of Total Employees Labor-Hours 12 Machine- Hours Labor-Hours Department Factory Administration Custodial Services Personnel Maintenance Machining Assembly 4 5 25 40 60 146 3,000 5,000 22,800 30,000 90,000 150,000 Square Feet of Space Occupied 5,000 2,000 3,000 10,000 70,000 20,000 110,000 20,000 80,000 100,000 70,000 10,000 80,000 Machining and Assembly are operating departments, the other departments are service departments. Factory Administration is allocated based on total labor-hours: Custodial Services based on square feet occupied; Personnel based on number of employees; and Maintenance based on machine-hours. Required: 1. Allocate service department costs to consuming departments by the step-down method. Then compute predetermined overhead rates in the operating departments using machine-hours as the allocation base in Machining and direct labor-hours as the allocation base in Assembly. 2. Allocate service department costs to consuming departments by direct method. Again compute predetermined overhead rates in Machining and Assembly. 3. Assume that the company doesn't bother with allocating service department costs but simply computes a plantwide overhead rate that divides the total overhead costs (both service department and operating department costs) by the total direct labor-hours. Compute the plantwide overhead rate. 4. Suppose a job requires machine-hours and labor-hours as follows: Direct Labor- Hours 25 75 100 Machine- Hours 190 10 200 Machining Department Assembly Department Total hours Using the overhead rates from requirements (1), (2), and (3), compute the amount of overhead cost that would be assigned to the job
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