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CoursHeroTranscribedText: Required information Problem 17-28 Service Department Cost Allocation; Plantwide versus Departmental Overhead Rates; Cost Drivers (LO 17-1, 17-2, 17-3) [The following information applies to the questions displayed below.] Travelcraft Company manufactures a complete line of fiberglass suitcases and attache cases. The firm has three manufacturing departments: Molding, Component, and Assembly. There are also two service departments: Power and Maintenance. The sides of the cases are manufactured in the Molding Department. The frames, hinges, and locks are manufactured in the Component Department. The cases are completed in the Assembly Department. Varying amounts of materials, time, and effort are required for each of the cases. The Power Department and Maintenance Department provide services to the three manufacturing departments. Travelcraft has always used a plantwide overhead rate. Direct-labor hours are used to assign overhead to products. The predetermined overhead rate is calculated by dividing the company's total estimated overhead by the total estimated direct-labor hours to be worked in the three manufacturing departments. Karen Mason, director of cost management, has recommended that Travelcraft use departmental overhead rates. The planned operating costs and expected levels of activity for the coming year have been developed by Mason and are presented by department in the following schedules. (All numbers are In thousands.)Service Departments Power Maintenance Departmental activity measures: Maximum capacity 1, 000 kilowatt hours Adjustable Estimated usage for the coming year 800 kilowatt hours 240 hours Departmental costs: Materials and supplies $ 7,000 $2,200 Variable labor 3,600 4,350 Fixed overhead 17,950 450 Total service department costs $28,550 $7,060 Manufacturing Departments Molding Component Assembly Department activity measures: Direct-labor hours 608 2,980 1,500 Machine hours 945 240 Departmental costs: Direct material $13, 800 $ 32,080 $ 1,270 Direct labor 4,300 22,000 11,000 Variable overhead 3,800 12,0ee 23,200 Fixed overhead 17,500 7,200 7,100 Total departmental costs $39, 400 $ 73, 200 $42,578 Use of service departments: Maintenance: Estimated usage in labor hours for the coming year 150 60 30 Power (in kilowatt-hours) : Estimated usage for the coming year 340 340 120 Maximum allotted capacity 500 300 200Problem 17-28 Part 2 2. Karen Mason has been asked to develop departmental overhead rates for comparison with the plantwide rate. The following steps are to be followed In developing the departmental rates. a. The Maintenance Department costs should be allocated to the three manufacturing departments using the direct method. b. The Power Department costs should be allocated to the three manufacturing departments using dual cost allocation combined with the direct method of service department cost allocation, Fixed costs are to be allocated according to maximum allotted capacity, and variable costs are to be allocated according to planned usage for the coming year. c. Calculate departmental overhead rates for the three manufacturing departments using a machine-hour cost driver for the Molding Department and a direct-labor-hour cost driver for the Component and Assembly departments. (Do not round intermediate calculations. Enter all your answers in thousands except "Departmental overhead rate" which should be entered in dollars rounded to 2 decimal places.) Molding Component Assembly Departmental overhead costs $ 21,300 19.200 S 30,300 Allocation of maintenance costs (direct method) 4,375 1,750 875 Allocation of power costs (dual, direct method) Fixed costs Variable costs Total allocated departmental overhead costs 25,675 S 20,950 31.175 Cost driver MH DLH DLH Departmental overhead rate Dur por MH DLH per DLH

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