10 Nov Department:Direct ChargesSquare FootageLabor Hours
Department:Direct ChargesSquare FootageLabor HoursHuman Resources$135,000Maintenance100,0005,000Machining275,0002,00020,000Assembly225,0003,00025,000The Human Resources Department services all departmentsRequirements:(1)Distribute the service department costs using the direct distribution method(2)Distribute the service department costs using the sequential distribution method with thedepartment servicing the greatest number of other departments being distributed first(3)Using the results from the direct distribution method, calculate the predeterminedfactory overhead rate for the machining department using labor hours as the basis8You have been hired by Thompson Waterfall ManufacturingYour first task isexamine different distribution methods for applying factory overhead to thevarious production orders that are processed during a yearThe following information was taken from the annual budget:Direct labor hours80,000Machine hours160,000Manufacturing costs:Direct labor$400,000Direct materials190,000Indirect labor65,000Electric power46,000Payroll taxes12,800Machine maintenance and repair10,200Factory supplies17,000Factory heat and light15,000Depreciation, taxes, and insurance:Factory buildings124,000Machinery310,000$1,190,000aDetermine the following factory overhead application rates under each of the followingmethods:(1)Direct labor cost(2)Direct labor hours(3)Machine hoursbPrepare a schedule showing the prime cost and total cost of Order 329 with the factoryoverhead 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
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