RECIPROCAL METHOD Stubing 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 |
$200,000 |
$60,000 |
$43,000 |
$74,000 |
|
Square footage |
— |
2,700 |
5,400 |
5,400 |
|
Number of employees |
30 |
— |
72 |
198 |
|
Direct labor hours |
— |
— |
25,000 |
40,000 |
Required:
1. Allocate the overhead costs of the support departments to the producing departments using the reciprocal method.
2. Using direct labor hours, compute departmental overhead rates.