Reference no: EM132540440

Meliana, Inc., has two support departments and two producing departments. Information for each department for the year is as follows:

                                                                Support Departments                          Producing Departments

                                           Maintenance            Personnel              Cutting                  Assembly

Budgeted overhead cost             $160,000                $300,000            $600,000             $800,000

Direct labor hours                       16,000                     2,000                   40,000               50,000

Machine hours                            40,000                       10,000                    90,000            30,000

Number of employees                      10                             20                         140               160

The company does not divide costs into fixed and variable components.

Maintenance costs are allocated based on machine hours, and personnel costs are allocated based on the number of employees.

Predetermined overhead rates for the producing departments are based on direct labor hours.

Required: (All answers should be supported by calculation; Round to two decimal places)

Question a. Meliana, Inc. allocates the support-department costs using the direct method. The predetermined overhead rate for the producing departments are:

Question b. Meliana, Inc. allocates the support-department costs using the stepdown method and starting with the Personnel Department. After, the allocation the total overhead costs of producing departments are:

Question c. Based on you calculation at (b), the predetermined overhead rate for the producing departments are