Determine the total cost allocation

Assignment Help Managerial Accounting

Reference no: EM13164282

Torrence Company has two support departments (Administration and Janitorial) and three producing departments (Fabricating, Assembly, and Finishing). Costs and activities are as follows:

Administration Janitorial Fabricating Assembly Finishing

Direct costs........................... $50,000 $30,000 $40,000 $50,000 $25,000

Number of employees............ 10 30 40 20

Square feet........................... 2,000 10,000 28,000 15,000

Direct labor hours................. 5,000 6,000 2,000

Administrative services are allocated based on the number of employees; janitorial services are allocated based on square footage. Overhead rates for the three producing departments are based on direct labor hours.

a) Determine the total cost allocation and departmental overhead rate for the producing departments using the direct method. Show your work.

b) Determine the total cost allocation and departmental overhead rate for the producing departments using the step-down method. Show your work.

Reference no: EM13164282

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