Franz Products, Inc assembles Goofy Gadgets (a children\'s toy). They have two o

Question

Franz Products, Inc assembles Goofy Gadgets (a children's toy). They have two operating departments (Assembly and Packaging). Their two service departments (HR & Maintenance) incur costs that are allocatable to other departments. Franz uses the step method for allocating service costs. HR costs are allocated first. The allocation is based on labor hours. Maintenance costs are allocated based on square feet. Annual Budget: Total overhead costs: HR $100,000, Maintenance $150,000, Assembly $320,000, Packaging $205,000 TOTAL $775,000 Labor Hours: HR 10,000, Maintenance 12,000, Assembly 47,600, Packaging 20,400, TOTAL 90,000 hours Square Feet: HR 1,200, Maintenance 1,800, Assembly 5,000, Packaging 3,000, TOTAL 11,000

Question: (A) Determine the allocation of services department costs using the step method

(B) Determine the predetermind MOH rate for Assembly assuming MOH is allocated based on labor hours. (Assume that all labor indicated for Assembly are direct.) Need to round two decimals You must show all calculations in your Answer.

(C) Using the information in this question above: Determine the predetermined MOH rate for Assembly assuming MOH is alloscated based on labor hours? (Assum that all hours indicated in this question for Assembly are direct .) Round to 2 decimals places

Please, Please..can I have your help.....thank you.....

Explanation / Answer

As reciprocal service between the service departments is involved the repeated redistribution step method has been applied as follows:

HR

$

Maintenance

$

Assembly

$

Packaging

$

Particulars Basis of allocation

HR

$

Maintenance

$

Assembly

$

Packaging

$

Budgeted overhead costs 100,000 150,000 320,000 205,000 HR overhead costs labor hours (100,000) 15,000 59,500 25,500 Maintenance overhead costs square feet 21,522 (165,000) 89,674 53,804 HR costs redistributed (21,522) 3228 12806 5488 Maintenance costs redistributed 421 (3228) 1754 1053 (421) 64 250 107 (8) (64) 35 21 (1.20) 5 2 1 1 Total overhead cost 484,025 290,976 Labor hours 47,600 20,400 Direct labor hour rate 10.17 14.26

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