labeled P1, P2, SI, and S2, respectively. Direct costs for each department and the Eastern Corporation...

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labeled P1, P2, SI, and S2, respectively. Direct costs for each department and the Eastern Corporation has two producing department and two service departments proportion of services costs used by various departments are as follows: Cost Direct Proportion of services used by: PI P2 Costs S1 $2 Center Pl P2 P112,500 75,000 25,000 .10 S2 40,000 .20 .30 In calculating predetermined overhead rates. machine hours are used as the base in Pl and direct labor hours as the base in P2. S1 Machine hours Direct labor hours -P1 62,500 50,000 .80 .10 .50 P2 50,000 25,000 Requirements: 1. Allocate the service department costs to operating departments and compute the factory overhead rate for Pl and P2 using the following methods: A. Direct Method b. Step method - start with Sl c. Algebraic method 2. Assume the company uses just one basis for applying overhead to jobs going through both P1 and P2, compute the overhead rate using direct labor hours as base. labeled P1, P2, SI, and S2, respectively. Direct costs for each department and the Eastern Corporation has two producing department and two service departments proportion of services costs used by various departments are as follows: Cost Direct Proportion of services used by: PI P2 Costs S1 $2 Center Pl P2 P112,500 75,000 25,000 .10 S2 40,000 .20 .30 In calculating predetermined overhead rates. machine hours are used as the base in Pl and direct labor hours as the base in P2. S1 Machine hours Direct labor hours -P1 62,500 50,000 .80 .10 .50 P2 50,000 25,000 Requirements: 1. Allocate the service department costs to operating departments and compute the factory overhead rate for Pl and P2 using the following methods: A. Direct Method b. Step method - start with Sl c. Algebraic method 2. Assume the company uses just one basis for applying overhead to jobs going through both P1 and P2, compute the overhead rate using direct labor hours as base.

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1 Allocation of Service Department Costs and Computation of Factory Overhead Rates A Direct Method Using the direct method service department costs are allocated directly to operating departments with... View the full answer