Question 2 Lano Limited has decided to move from a factory-wide to a departmental overhead allocation policy with the overhead allocation base to be the dominant activity in that department. It has three departments, Prep, Casting and Finishing. You are given the following information: Expected Overheads Machine hours Labour Hours Prep 1,200,000 6,000 6785 Casting 560,000 5,690 3,000 Finishing 890,000 4,000 8,000 Based on this information, what will the overhead allocation rate for the Prep department be? Round your answer to the nearest whole number.

Question 2 Lano Limited has decided to move from a factory-wide to a departmental overhead allocation policy with the overhead allocation base to be the dominant activity in that department. It has three departments, Prep, Casting and Finishing. You are given the following information: Expected Overheads Machine hours Labour Hours Prep 1,200,000 6,000 6785 Casting 560,000 5,690 3,000 Finishing 890,000 4,000 8,000 Based on this information, what will the overhead allocation rate for the Prep department be? Round your answer to the nearest whole number.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 21E: Refer to the data in Exercise 7.20. The company has decided to use the sequential method of...

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Refer to the data in Exercise 7.20. The company has decided to use the sequential method of allocation instead of the direct method. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the overhead costs to the producing departments using the sequential method. (Take allocation ratios out to four significant digits. Round allocated costs to the nearest dollar.) 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.)
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