Question:
Kumar Company has two Producing Departments and two Support Centers. The following budgeted data pertain to these four departments:
|
|
Support Departments
|
Producing Departments
|
|
|
Maintenance
|
Personnel
|
Assembly
|
Painting
|
|
Overhead
|
$2,00,000
|
$60,000
|
$43,000
|
$74,000
|
|
Square Footage
|
-
|
2,700
|
5,400
|
5,400
|
|
No. of employees
|
30
|
-
|
72
|
198
|
|
Direct labour hours
|
-
|
-
|
25,000
|
40,000
|
Required:
1. Allocate the Overhead Costs of the Support Departments to the Producing Departments using the Direct Method. Explain with reasoning the basis on which allocation has been done.
2. Using Direct labour Hours compute departmental Overhead rates for the two Producing Departments.