(SOLVED) Jackson Instrument Company manufactures gauges for the construction industry The


Question Description:

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Jackson Instrument Company manufactures gauges for the construction industry. The company has two production departments: Machining and Finishing. There are also three support departments: Human Resources (HR), Maintenance and Design. The budgeted overhead costs for the year for each department are as follows:
HR………………………………………………$250,000
Maintenance………………………………………230,000
Design……………………………………………350,000
Machining………………………………………..800,000
Finishing…………………………………………400,000
The budgeted machine hours for the Machining Department are 30,000 and the budgeted direct labour hours for the Finishing Department are to coo. These activities are used to allocate manufacturing overhead costs to products in the two departments. The usage of the support departments’ output for the year is as follows:
Required:
1. Use the direct method to allocate support department costs to production departments, and determine the predetermined manufacturing overhead rates for the two production departments.
2. Explain the sequence that should be used to allocate the support department costs to production departments using the step-down method.
3. Use the step-down method to allocate support costs to production departments, and determine the predetermined manufacturing overhead rates for the two production departments.

Answer

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