Summit Manufacturing has two producing departments, Grinding and Smoothing, and two service departments, Maintenance and General Factory. Departmental overhead costs for the coming year have been budgeted as follows, before the distribution of service department costs to producing departments: Grinding, $175,000; Smoothing, $230,000; Maintenance, $76,000; and General Factory, $200,000. Maintenance costs are distributed based on hours of maintenance services provided. General Factory costs are distributed based on the maximum number of employees during the year.
Factory overhead will be applied to products using predetermined departmental overhead rates. The predetermined rate in Grinding is based on machine hours, and the predetermined rate in Smoothing is based on direct labor hours. The survey for the coming year is summarized as follows:

Required:
(1) Calculate, to the nearest cent, the predetermined departmental overhead rates for the coming year, using the direct method to distribute service department costs.
(2) Calculate, to the nearest cent, the predetermined departmental overhead rates for the coming year, using the simultaneous method.
(3) Calculate, to the nearest cent, the predetermined departmental overhead rates for the coming year, using the step method. Use the following department distribution sequence: first Maintenance, then General Factory.

Transcribed Image Text:

Grindin Smoothing Maintenance Factory Direct labor hours used Machine hours used Hours of maintenance service used Number of materials requisitions Average number of employees.. Maximum number of employees.. 7,500 4,000 180 200 5 6 30,000 2,000 900 10 200 30 720 10