Question
Three Company uses a process organized into two service or support departments (Support 1 and Support 2) and two producing departments (Production 1 and Production
Three Company uses a process organized into two service or support departments (Support 1 and Support 2) and two producing departments (Production 1 and Production 2). Budgeted data for the four departments for the month of January are as follows. Support Departments Producing Departments Support 1 Support 2 Production 1 Production 2 Overhead $100,000 $268,000 $174,000 $126,000 Number of employees 200 400 400 Machine hours 1,000 3,000 1,000
Overhead cost for the Support 1 Department is allocated based on number of employees. Overhead cost for the Support 2 Department is allocated based on machine hours. Note: Round all calculations to two decimal points. Round all dollar amounts to the nearest dollar. Determine the total overhead cost for Production 1 using the direct method to allocate service department costs.
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