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Indirect Cost Allocation: Direct Method
Sprint Manufacturing Company has two production departments, Melting and Molding. Direct
general plant management and plant security costs benefit both production departments. Sprint
allocates general plant management costs on the basis of the number of production employees
and plant security costs on the basis of space occupied by the production departments. In
November, the following overhead costs were recorded:
Melting Department direct overhead
Molding Department direct overhead
General plant management
Plant security $180,000
300,000
100,000
30,000 Other pertinent data follow:
Melting Molding
Number of employees
25
60
Space occupied (square feet) 10,000 40,000
Machine hours
10,000 2,000
Direct labor hours
4,000 20,000 (a) Prepare a schedule allocating general plant management costs and plant security costs to the
Melting and Molding Departments.
Department Total
$Answer Melting
$Answer 100000 Molding
$Answer 0 0 General Plant Management $Answer $Answer
30000 Plant security $Answer
0 0 (b) Determine the total departmental overhead costs for the Melting and Molding Departments.
Melting $Answer
0 Molding $Answer
0 (c) Assuming the Melting Department uses machine hours and the Molding Department uses
direct labor hours to apply overhead to production, calculate the overhead rate for each
production department. (Round your answers to two decimal places.)
Melting $Answer
0 Molding $Answer
0