Reference no: EM133056590
Question - Indirect Cost Allocation - Direct Method - Charlie Manufacturing Company has two production departments, Melting and Molding. Direct general plant management and plant security costs benefit both production departments. Charlie allocates general plant management costs on the basis of the number of production employees and plant security costs on the basis of space occupied by the production departments using the direct method of overhead allocation. In November, the following overhead costs were recorded:
Melting Department overhead $500,000
Molding Department overhead 400,000
General plant management 200,000
Plant security 100,000
Other pertinent data follow:
|
|
Melting
|
Molding
|
|
Number of employees
|
60
|
40
|
|
Space occupied (square feet)
|
20,000
|
80,000
|
|
Machine hours
|
1,056
|
3,200
|
|
Direct labor hours
|
10,560
|
7,200
|
Required -
(a) Prepare a schedule allocating general plant management costs and plant security costs to the Melting and Molding Departments.
(b) Determine the total departmental overhead costs for the Melting and Molding Departments.
(c) Assuming the Melting Department uses machine hours and the Molding Department uses direct labor hours to apply overhead to production, calculate the overhead rate for each production department.