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The Santana Company uses normal costing. The company has one service department (M) and two production departments (P1 and P2). The service department allocates costs
The Santana Company uses normal costing. The company has one service department (M) and two production departments (P1 and P2). The service department allocates costs to P1 and P2 using machine hours in those departments. The service department charges variable costs and fixed costs separately. Both of the production departments use direct labor hours to compute their predetermined overhead rates. The budgeted costs in Department M for 2020 are $90,000 variable and $150,000 fixed. Data for the production departments for 2020 are shown below: Department P1 Department P2 Budgeted machine hours 35,000 hours 15,000 hours Long-run average machine hours 42,000 hours 18,000 hours Budgeted variable overhead cost $200,000 $140,000 Budgeted fixed overhead cost $300,000 $180,000 Budgeted direct labor hours 40,000 hours 20,000 hours The production department overhead amounts above do NOT include service cost allocations. Compute the predetermined overhead rate in P2 for 2020. Please show all of your work. Question 2 6 pts The actual overhead incurred in Department M during 2020 was $89,250 in variable costs and $156,000 in fixed costs. There were 34,000 actual machine hours and 42,000 actual direct labor hours in Department P1 during 2020. There were 17,000 actual machine hours and 21,000 actual direct labor hours in Department P2 during 2020. The actual overhead incurred in the production departments (before service cost allocations) was $504,000 for Department P1 and $340,000 in Department P2. Compute the total underallocated or overallocated overhead for Department P2 for the year 2020. Please show all of your work
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