Charlie Company manufactures a high SPF sunscreen lotion using two producing departments: mixing and bottling. Three service departments support the production departments: maintenance, building and grounds, and cafeteria. Budget data for overhead for the five departments are shown below. Cost drivers are as follows: Maintenance/Machine hours; Building & Grounds/Square feet; Cafeteria/Number of employees.

1. Allocate the overhead costs to the producing departments using the direct method and then compute the total overhead cost for each producing department.
2. Using the information developed in 1. (Above) compute departmental overhead rates for the mixing and bottling departments based on machine hours used by the mixing and bottlingdepartments.

Transcribed Image Text:

Service Departments Maintenance Building & Cafeteria Producing Departments MxgBottling Grounds $70,000 Overhead Costs Number of employees Square feet Machine hours $30.000 10 .000 S50,000 $20.000 S30.000 3.000 3.000 9.000 1.000 4.000