Question
The company has two support departments, A1 and A2, and two producing departments, P1 and P2. S1 costs of $364,000 are allocated on the basis
The company has two support departments, A1 and A2, and two producing departments, P1 and P2. S1 costs of $364,000 are allocated on the basis of standard service used. A2 costs of $58,000 are allocated on the basis of number of employees. The direct costs of P1 and P2 are $180,000 and $300,000, respectively. Data on standard service hours and number of employees are as follows:
| A1 | A2 | P1 | P2 |
Standard service hours | 100 | 50 | 300 | 150 |
Number of employees | 5 | 10 | 45 | 45 |
Direct labor hours | 500 | 500 | 2,500 | 2,500 |
Predetermined overhead rates for P1 and P2 are based on direct labor hours. What is the overhead rate for P2 assuming the direct method is used?
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