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In: Accounting

Kinga Corp. is a manufacturing firm which has two service departments, Maintenance and Engineering, and two...

Kinga Corp. is a manufacturing firm which has two service departments, Maintenance and Engineering, and two production departments, Assembly and Painting. The Maintenance Department costs of $50,000 are allocated on the basis of square feet. The Engineering Department costs of $90,000 are allocated based on the engineering hours. The costs of production departments, Assembly and Painting, are $544,000 and $258,000, respectively.
Data on overhead costs, square feet and engineering hours, are as follows:


Service Departments		 production Departments
​ Maintenance Department Engineering Department Assembly Department Painting Department
Overhead costs: $50,000 $90,000 $544,000 $258,000
square feet 630 1,400 2,100 2,870
engineering hours 286 52 1,118 1,144

Overhead rates are established for each of the production departments. The Assembly Department allocates overhead based upon assembly machine hours and the Painting Department allocates overhead based upon units painted. The planned levels are 15,500 assembly machine hours and 18,000 units painted.

Allocate costs to the production departments using the reciprocal method, then find the overhead rates for the Assembly and Painting departments.

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ekkarill92 answered 2 years ago
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