Department: Direct Charges Square Footage Labor Hours Human


Question Description:

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Department: Direct Charges Square Footage Labor Hours Human Resources $135,000 — — Maintenance 100,000 — 5,000 Machining 275,000 2,000 20,000 Assembly 225,000 3,000 25,000 The Human Resources Department services all departments. Requirements: (1) Distribute the service department costs using the direct distribution method. (2) Distribute the service department costs using the sequential distribution method with the department servicing the greatest number of other departments being distributed first. (3) Using the results from the direct distribution method, calculate the predetermined factory overhead rate for the machining department using labor hours as the basis. 8. You have been hired by Thompson Waterfall Manufacturing. Your first task is examine different distribution methods for applying factory overhead to the various production orders that are processed during a year. The following information was taken from the annual budget: Direct labor hours 80,000 Machine hours 160,000 Manufacturing costs: Direct labor $400,000 Direct materials 190,000 Indirect labor 65,000 Electric power 46,000 Payroll taxes 12,800 Machine maintenance and repair 10,200 Factory supplies 17,000 Factory heat and light 15,000 Depreciation, taxes, and insurance: Factory buildings 124,000 Machinery 310,000 $1,190,000 a. Determine the following factory overhead application rates under each of the following methods: (1) Direct labor cost (2) Direct labor hours (3) Machine hours b. Prepare a schedule showing the prime cost and total cost of Order 329 with the factory overhead costs applied on each of the three bases; Job Cost Sheet 329 shows the following: raw materials, $6,200; direct labor, 6,000 hours and $29,000; machine hours, 2,800.

Answer

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