Reference no: EM132653532

Question - Direct method and sequential method of distributing service department costs

A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining.

The following data have been estimated for next year's operations:

Direct labor hours: Assembly, 80,000; Machining, 40,000

Floor space occupied: Factory Office, 10%; Assembly, 40%;

Machining, 50%

Required - Prepare flexible budgets for factory overhead at the 1,000, 2,000, and 4,000 unit levels. (Hint: You must first decide which of the listed costs should be considered variable and which should be fixed.)