Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments-Molding
Question:
For all requirements, round allocation ratios to four significant digits and round allocated costs to the nearest dollar.
Required:
1. Calculate the overhead rates per direct labor hour for the Molding Department and the Assembly Department using the direct allocation method to charge the production departments for support department costs.
2. Calculate the overhead rates per direct labor hour for the Molding Department and the Assembly Department using the reciprocal method to charge support department costs to each other and to the production departments.
3. Explain the difference between the methods, and indicate the arguments generally presented to support the reciprocal method over the direct allocation method.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Cornerstones of Cost Management
ISBN: 978-1111824402
2nd edition
Authors: Don R. Hansen, Maryanne M. Mowen