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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.

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