JYD Manufacturing Company has two production departments (Fabrication and Assembly) and three services departments (General Factory Administration, Factory Maintenance, and Factory Cafeteria). A summary of the year's overhead cost and other data for each department prior to allocation of service department costs appear below: FabricationAssemblyGeneral Factory AdministrationFactory MaintenanceFactory CafeteriaOverhead Costs$6,730,000$4,850,000$160,000$203,200$240,000Direct Labor Costs562,500437,50031,00027,00042,000Number of Employees28020012820Square Footage Occupied88,00072,0001,7502,0004,800The costs of the General Factory Administration, Factory Maintenance, and Factory Cafeteria are allocated on the basis of direct labor hours, square footage occupied, and the number of employees respectively. It is the company's policy that the order of distribution is based on the highest dollar amount of costs originating in the service departments and the direct method is used.Required:a. What is the total overhead cost allocated to the Fabrication Department?b. Assuming Assembly Department uses direct labor hours, what is the Factory Overhead rate of the Assembly Department?

Solution a: From Service Department Cost Allocation - Direct Method Service Department…

Answered: JYD Manufacturing Company has two…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...

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JYD Manufacturing Company has two production departments (Fabrication and Assembly) and three services departments (General Factory Administration, Factory Maintenance, and Factory Cafeteria).

A summary of the year's overhead cost and other data for each department prior to allocation of service department costs appear below:

	Fabrication	Assembly	General Factory Administration	Factory Maintenance	Factory Cafeteria
Overhead Costs	$6,730,000	$4,850,000	$160,000	$203,200	$240,000
Direct Labor Costs	562,500	437,500	31,000	27,000	42,000
Number of Employees	280	200	12	8	20
Square Footage Occupied	88,000	72,000	1,750	2,000	4,800

The costs of the General Factory Administration, Factory Maintenance, and Factory Cafeteria are allocated on the basis of direct labor hours, square footage occupied, and the number of employees respectively. It is the company's policy that the order of distribution is based on the highest dollar amount of costs originating in the service departments and the direct method is used.

Required:

a. What is the total overhead cost allocated to the Fabrication Department?

b. Assuming Assembly Department uses direct labor hours, what is the Factory Overhead rate of the Assembly Department?

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