Torrence Company has two support departments (Administration and Janitorial) and three producing departments (Fabricating, Assembly, and Finishing). Costs and activities are as follows:
Administration Janitorial Fabricating Assembly Finishing
Direct costs......................... $50,000 $30,000 $40,000 $50,000 $25,000
Number of employees........ 10 30 40 20
Square feet......................... 2,000 10,000 28,000 15,000
Direct labor hours............... 5,000 6,000 2,000
Administrative services are allocated based on the number of employees; janitorial services are allocated based on square footage. Overhead rates for the three producing departments are based on direct labor hours.
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Determine the total cost allocation and departmental overhead rate for the producing departments using the direct method. Show your work.
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Determine the total cost allocation and departmental overhead rate for the producing departments using the step-down method. Show your work.