Three Company uses a process organized into two service or support departments (Support 1 and Support 2)
Question:
Three Company uses a process organized into two service or support departments (Support 1 and Support 2) and two producing departments (Production 1 and Production 2).Budgeted data for the four departments for the month of January are as follows.
Support Departments
Producing Departments
Support 1
Support 2
Production 1
Production 2
Overhead
$100,000
$268,000
$174,000
$126,000
Number of employees
200
400
400
Machine hours
1,000
3,000
1,000
Overhead cost for the Support 1 Department is allocated based on number of employees.Overhead cost for the Support 2 Department is allocated based on machine hours.
Note: Round all calculations to two decimal points.Round all dollar amounts to the nearest dollar.
Determine the total overhead cost for Production 1 using the reciprocal method to allocate service department costs.
Note: Give your answer using dollar signs and commas but not decimal points (cents).
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura