Westmore Company has two service departments and two operating departments. Budgeted costs and other data relating to these departments are presented below: Building Operating Department & Grounds Personnel A B Departmental costs ..... $54,000 $200,000 $650,000 $800,000 Square feet occupied ... 1,000 3,000 12,000 15,000 Number of employees .... 10 5 45 55 Direct laborhours ..... 76,000 92,000 The costs of Building & Grounds are allocated first on the basis of square feet of space occupied. Personnel costs are allocated on the basis of number of employees. The departmental costs for the operating departments are overhead costs. Predetermined overhead rates in the operating departments are computed on the basis of direct laborhours. Assume that the company uses the direct method of allocating service department costs. The predetermined overhead rate that would be used in Department B would be closest to: a. $11.50/DLH. b. $12.00/DLH. c. $10.00/DLH. d. $10.22/DLH.
Westmore Company has two service departments and two operating departments.
Budgeted costs and other data relating to these departments are presented
below:
Building Operating Department
& Grounds Personnel A B
Departmental costs ..... $54,000 $200,000 $650,000 $800,000
Square feet occupied ... 1,000 3,000 12,000 15,000
Number of employees .... 10 5 45 55
Direct laborhours ..... 76,000 92,000
The costs of Building & Grounds are allocated first on the basis of square
feet of space occupied. Personnel costs are allocated on the basis of number
of employees. The departmental costs for the operating departments are
are computed on the basis of direct laborhours.
Assume that the company uses the direct method of allocating
service department costs. The predetermined overhead rate that
would be used in Department B would be closest to:
a. $11.50/DLH.
b. $12.00/DLH.
c. $10.00/DLH.
d. $10.22/DLH.
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