Allocating overhead. Cameron Company has two production departments and a main- tenance department. In addition, the company keeps other costs for the general lant in a separate account. The estimated cost data for Year 1 follow:
| Cost |
Production Dept.1 |
Production Dept. 2
|
Maintenance |
General_Plant |
|
Direct Labor
|
$100,000
|
$ 60,000
|
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|
---
|
|
Indirect Labor
|
56,000
|
28,000
|
$45,000
|
$40,000
|
|
Indirect Materials
|
18,000
|
14,000
|
1,800
|
16,000
|
|
Miscellaneous
|
6,000
|
10,000
|
3,200
|
10,000
|
|
|
$180,000
|
$112,000
|
$50,000
|
$66,000
|
|
Maintenance
|
16,000 Hours
|
24,000 Hours
|
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|
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|
The general plant services the three departments in the following proportions: 50 percent (Department 1); 30 percent (Department 2); 20 percent (Maintenance). Allocate maintenance costs based on maintenance hours.
Allocate maintenance department and general plant costs to the production departments.
Use the step method, starting with general plant costs.