Veneer Company has two support departments and two producing departments. The number of employees in each department is: Personnel 10 Cafeteria 25 Producing Department A 265 Producing Department B 250 550 The department costs of the Personnel Department are allocated on a basis of the

Veneer Company has two support departments and two producing departments. The number of employees in each department is: Personnel 10 Cafeteria 25 Producing Department A 265 Producing Department B 250 550 The department costs of the Personnel Department are allocated on a basis of the

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 7EB: A company estimates its manufacturing overhead will be $840,000 for the next year. What is the...

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Veneer Company has two support departments and two producing departments. The
number of employees in each department is:
Personnel
10
Cafeteria
25
Producing Department A
265
Producing Department B
250
550
The department costs of the Personnel Department are allocated on a basis of the
number of employees. If these costs are budgeted at $37,125 during a given period, the
amount of cost allocated (rounded to two decimal places) to Department B under the
direct method would be:
$0.
$16,875.00.
$17,187.50.
$18,191.00

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