Reference no: EM131570712

Problem - Indirect Cost Allocation: Direct Method

Sprint Manufacturing Company has two production departments, Melting and Molding. Direct general plant management and plant security costs benefit both production departments. Sprint allocates general plant management costs on the basis of the number of production employees and plant security costs on the basis of space occupied by the production departments. In November, the following overhead costs were recorded:

Melting Department direct overhead	$180,000
Molding Department direct overhead	300,000
General plant management	100,000
Plant security	30,000

Other pertinent data follow:

	Melting	Molding
Number of employees	25	60
Space occupied (square feet)	10,000	40,000
Machine hours	10,000	2,000
Direct labor hours	4,000	20,000

(a) Prepare a schedule allocating general plant management costs and plant security costs to the Melting and Molding Departments.

(b) Determine the total departmental overhead costs for the Melting and Molding Departments.

(c) Assuming the Melting Department uses machine hours and the Molding Department uses direct labor hours to apply overhead to production, calculate the overhead rate for each production department. (Round your answers to two decimal places.)