Crow Company Applies Factory Overhead in Its Two Producing Departments $\quad$

Essay

Crow Company applies factory overhead in its two producing departments using a predetermined rate based on budgeted machine hours in the Mixing Department and based on budgeted labour hours in the Packaging Department.Variable cafeteria costs are allocated to the producing departments based on budgeted number of employees,and fixed costs are allocated based on the capacity number of employees.Variable maintenance costs are allocated on the budgeted number of direct labour hours,and fixed costs are allocated on labour hour capacity.The data concerning next year's operations are as follows:
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text {Support Departments\quad\quadProducing Departments}$
$\begin{array}{lcccc}\text { Budgeted costs: } & \text { Cafeteria } & \text { Maintenance } & \text { Mixing } & \text { Packaging } \\ \text { Variable costs } & \$ 60,000 & \$ 84,000 & \$ 300,000 & \$ 324,000 \\ \text { Fixed costs } & 18.000 & 30.000 & 120.000 & 140.000 \\\end{array}$
$$\begin{array}{l}\text { Other data: }\\\begin{array} { l r r } \text { Direct labour hours (capacity) } & 10,000 & 20,000 \\\text { Direct labour hours (budgeted) } & 8,000 & 16,000 \\\text { Number of employees (capacity) } & 30 & 60 \\\text { Number of employees (budgeted) } & 20 & 40 \\\text { Machine hours (capacity) } & 33,000 & 66,000 \\\text { Machine hours (budgeted) } & 20,000 & 60,000\end{array}\end{array}$$
a.Prepare a schedule showing the allocation of budgeted support department costs to producing departments.
b.Determine the predetermined overhead rate for the producing departments.