Question
The following budgeted information pertains to Olsen Company: Human Resources Facilities Mixing Molding Direct department costs $80,000 $40,000 $280,000 $540,000 Direct labor hours 5,000 3,000
The following budgeted information pertains to Olsen Company:
| Human Resources | Facilities | Mixing | Molding |
Direct department costs | $80,000 | $40,000 | $280,000 | $540,000 |
Direct labor hours | 5,000 | 3,000 | 9,000 | 27,000 |
Square footage | 2,000 | 3,000 | 10,500 | 17,500 |
# of Employees | 4 | 5 | 11 | 9 |
Mixing and Molding are the production departments. Human Resource Department costs are assigned to other departments based on the number of employees, and Facilities Department costs are assigned to other departments based on square footage occupied. Direct department costs include raw materials, direct labor, and overhead other than the human resources and facilities costs.
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Question text
Using the direct method, assign the service department costs to the production departments ndicate the fractions/percentages you used to allocate each of the service departments. Label the final cost for the production departments carefully.
B. Once the service department costs are allocated to the production departments, predetermined application rates are set for the two production departments using direct labor hours as the cost driver. Calculate those two predetermined overhead rates using the cost totals you calculated in the previous question.
C.
An order of 100 units of product has been completed accumulating the following costs:
Direct labor cost $12 per hour
Direct Labor Hours 20 min. per unit in Mixing; 1 hour per unit in Molding
Calculate the total non-direct cost of this completed order.
Remember to use the predetermined rates that you calculated in the previous question.
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