Perry Company has two service departments, Maintenance and Human Resources, and two production departments, Machining and Assembly. The following data have been estimated for next year's operations: The Human Resources Department services all departments.
Requirements:
(1) Distribute the service department costs using the direct distribution method.
(2) Distribute the service department costs using the sequential distribution method with the department servicing the greatest number of other departments being distributed first.
(3) Using the results from the direct distribution method, calculate the predetermined factory overhead rate for the machining department using labor hours as the basis.

Question

Perry Company has two service departments, Maintenance and Human Resources, and two production departments, Machining and Assembly. The following data have been estimated for next year's operations:  The Human Resources Department services all departments.
Requirements:
(1) Distribute the service department costs using the direct distribution method.
(2) Distribute the service department costs using the sequential distribution method with the department servicing the greatest number of other departments being distributed first.
(3) Using the results from the direct distribution method, calculate the predetermined factory overhead rate for the machining department using labor hours as the basis.

Quizplus · Accepted Answer

The Answer of Perry Company has two service departments, Maintenance and Human Resources, and two production departments, Machining and Assembly. The following data have been estimated for next year's operations:  The Human Resources Department services all departments.
Requirements:
(1) Distribute the service department costs using the direct distribution method.
(2) Distribute the service department costs using the sequential distribution method with the department servicing the greatest number of other departments being distributed first.
(3) Using the results from the direct distribution method, calculate the predetermined factory overhead rate for the machining department using labor hours as the basis.

Perry Company Has Two Service Departments, Maintenance and Human Resources