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Problem 4B-6 Step-Down Method versus Direct Method; Predetermined Overhead Rates [LO4-10, LO4- The Sendai Co.,...

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Accounting

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Problem 4B-6 Step-Down Method versus Direct Method; Predetermined Overhead Rates [LO4-10, LO4- The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year: Factory Administration Custodial Services Personnel Maintenance Machining-overhead Assembly-overhead Total cost $ 911,300 132,466 38,734 83,920 1,327,132 436,848 $2,930,400 The company allocates service department costs to other departments in the order listed below Square Total Feet of Direct Number of Labor- Space Labor- Machine- Department Employees Hours Occupied HoursHours Factory Administration Custodial Services Personnel Maintenance Machining Assembly 32 15 14 52 13,500 7,300 4,500 14,200 12,200 49,000 15,200 70,000 70,000 75,000 180,000 210,000 20,000 171,000 36,000 350,500 135,400 246,000 216,000 132 Machining and Assembly are operating departments; the other departments are service departments. Factory Administration is allocated based on labor-hours; Custodial Services based on square feet occupied; Personnel based on number of employees, and Maintenance based on machine-hours

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