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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
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 $ 563,850 146,440 49,332 155,588 864,540 1,306,050 $3,085,800 The company allocates service department costs to other departments in the order listed below. Square Total Feet of Direct Department Factory Administration Number of Labor- Employees 23 Space Labor Machine- Hours Occupied Hours Hours - 12,600 Custodial Services 9 7,900 11,800 Personnel Maintenance Machining Assembly 12 15,000 5,300 56 53,000 18,600 60 120,000 90 250 96,000 123,000 174,000 180,000 24,000 258,000 87,000 375,900 168,300 381,000 261,000 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. 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 Machine- Labor- Hours Hours Machining Department Assembly Department 245 26 19 72 Total hours 264 98 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. Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4
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