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The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year: Factory Administration Custodial Services Personnel Maintenance
The Sendai Co., Ltd., of Japan 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 $1,014, 315 143,440 46,502 129,983 1,313,880 232,480 $2,880,600 The company allocates service department costs to other departments in the order listed below. Department Factory Administration Custodial Services Personnel Maintenance Machining Assembly Number of Employees 25 17 24 54 80 120 320 Square Total Feet of Direct Labor Space Labor- Machine- Hours Occupied Hours Hours 9,600 15,400 3,500 12,400 10,900 48,100 13,200 80,000 90,000 112,000 204,000 200,000 30,000 214,000 68,000 355,900 157,200 326,000 272,000 Machining and Assembly are operating departments; the other departments are service departments. Factory Administration is allocated based on 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. 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. Repeat (1) above, this time using the 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 single 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 and labor time as follows: Direct Labor- Hours 28 74 102 Machine- Hours 260 15 275 Machining Department Assembly Department Total hours Using the overhead rates computed in (1), (2), and (3) above, compute the amount of overhead cost that would be assigned to the job if the overhead rates were developed using the step-down method, the direct method, and the plantwide method. Required 1 Required 2 Required 3 Required 4 Using the overhead rates computed in (1), (2), and (3) above, Compute the amount of overhead to the job if the overhead rates were developed using the step-down method, the direct method (Do not round intermediate calculations. Round "Predetermined overhead rates" to 2 decimal pla to the nearest whole dollar amount.) Overhead Cost Step-down method Direct method Plantwide method
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