The following data on overhead apply to the RR Manufacturing Company which manufactures frames for large trucks in three production departments (J-122, J-123, and J-125). There are two service departments, the Human Resources Department and the Facilities Department.

	Service Departments		Production Department
	Human Resources	Facilities	J-122	J-123	J-125	Total
Budgeted Overhead	$16,000	$35,000	$28,000	$145,000	$185,000	$409,000
Human Resources* (hours)		400	800	1,200	1,600	4,000
Facilities** (thousand square feet)	600		400	1,200	1,800	4,000

Allocated on the basis of hours of usage in the HR department.
Allocated on the basis of floor space.

Required
Using hours as the application base for the Human Resources Department and square feet of floor space for the Facilities Department, apply overhead from these service departments to the production departments, using the following two methods. Calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar.

Direct method.

Step method (assume the human resources department is allocated first).

Answer rating: 100% (QA)

Direct Method Under direct method Service departments costs shall be allocated to Production departm... View the full answer