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Kay and Dee Manufacturing (K+D) has three business lines:

Repair and Overhead (R+O): Repair of truck transmissions.

Manufacturing: manufacturing of custom truck transmission parts

Chemical Treating: cleaning of old parts

They also have three support departments.Major activities of each department are:

Human Resources (HR): Payroll, HR staff, employee services,

Union/Management relations.Costs for this service department are allocated

based on Headcount.

Facility: buildings, building maintenance and related building costs.Costs for this

service department are allocated based on area occupied.

Main Office (HQ): salaries for the President, VP, and Finance department.Costs

for this service department are allocated based on Direct Labour hours.

Other financial information is in Appendix A (below).

REQUIRED:

1.Using the Direct Method, allocate overhead costs from the support departments to the business lines.

2.Using the Step-down method, allocate overhead costs from the support departments to the business lines in the following order:

1^st Building

2^nd HR

3^rd HQ

3.Using the Reciprocal Method, allocate overhead costs from the support departments to the business lines.

Appendix A

CoursHeroTranscribedText: Direct Labour (hours) Processing Time (hours) Headcount (employees) Floorspace (square feet) Overhead Costs (in $) _| 4,901,398 777,199 9,198,554 16,179,253 Repair + HQ HR Building Overhaul Manufacturing 0 0 0 225,000 237,422 0 0 0 0 0 8 7 35 1 80 350 13,005 2,200 19,600 540,000 360,000 33,923,386 Chemical Treating 1 ,820 3 28,483 845,325

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