80.2K

Verified Solution

Link Copied!

Basis used is number of employees Support departments: \begin{tabular}{lrr} Building and grounds & $36,000 \\ Personnel & 1,792 \\ General plant administration & 26,796 \\ Cafeteria: Operating loss & 1,060 \\ Storeroom & 12,924 & \\ \cline { 3 - 4 }$78,572 \end{tabular} Operating departments: Machining Assembly Total for support and operating departments 1. Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate. 2. Using the direct method, rework requirement 1. 3. Based on the following information about two jobs, determine the total overhead costs for each job by using rates developed in (a) requirement 1 and (b) requirement 2 . 4. The company evaluates the performance of the operating department managers on the basis of how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained in requirements 1 and 2? Explain. The Eastern Summit Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: (Click the icon to view the department overhead budgets.) Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. These rates are developed after support-department costs are allocated to operating departments. Bases for allocation are to be selected from the following: (Click the icon to view the data.)

Answer & Explanation Solved by verified expert

See Answer