Henry Company Has Three Support Departments and Two Producing Departments

Essay

Henry Company has three support departments and two producing departments. Information for each department for 2006 is as follows: Plant administration costs are allocated based on direct labour hours, plant maintenance costs are allocated based on square footage occupied, and plant cafeteria costs are allocated based on the number of employees.
The company does not divide overhead into fixed and variable components. Predetermined overhead rates for the producing departments are based on direct labour hours.
Allocate the support department costs using the direct method. Next calculate the predetermined overhead rates the producing departments would use to apply overhead to units of product.