JYD Manufacturing Company has two production departments (Fabrication and Assembly) and three services departments (General Factory Administration,
Question:
JYD Manufacturing Company has two production departments (Fabrication and Assembly) and three services departments (General Factory Administration, Factory Maintenance, and Factory Cafeteria).
A summary of the year's overhead cost and other data for each department prior to allocation of service department costs appear below:
Fabrication | Assembly | General Factory Administration | Factory Maintenance | Factory Cafeteria | |
Overhead Costs | $6,730,000 | $4,850,000 | $160,000 | $203,200 | $240,000 |
Direct Labor Costs | 562,500 | 437,500 | 31,000 | 27,000 | 42,000 |
Number of Employees | 280 | 200 | 12 | 8 | 20 |
Square Footage Occupied | 88,000 | 72,000 | 1,750 | 2,000 | 4,800 |
The costs of the General Factory Administration, Factory Maintenance, and Factory Cafeteria are allocated on the basis of direct labor hours, square footage occupied, and the number of employees respectively. It is the company's policy that the order of distribution is based on the highest dollar amount of costs originating in the service departments and the direct method is used.
Required:
a. What is the total overhead cost allocated to the Fabrication Department?
b. Assuming Assembly Department uses direct labor hours, what is the Factory Overhead rate of the Assembly Department?