Eagle Company Applies Factory Overhead in Its Two Producing Departments

Essay

Eagle Company applies factory overhead in its two producing departments using a predetermined rate based on budgeted machine hours in the Blending Department and based on budgeted labor hours in the Containerizing 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 labor hours, and fixed costs are allocated on labor hour capacity. The data concerning next year's operations are as follows:
Support Departments Producing Departments
Required:
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.