Madrid Has Two Service Departments (General Factory and Human Resources)and

question 64

Essay

Madrid has two service departments (General Factory and Human Resources)and two production departments (Machining and Assembly).The company uses the direct method of service-department cost allocation,allocating General Factory cost on the basis of square feet and Human Resources cost on the basis of employees.Budgeted allocation-base and operating data for the four departments follow.
A.Allocate the company's service-department costs to the producing departments.
B.Compute the overhead application rates for Machining and Assembly.

Application rates:
Machining: $5,200,000 / 80,000 machine hours = $65 per MH
Assembly: $3,300,000 / 150,000 labor hours = $22 per LH

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Definitions:

Surround Sound Systems

Audio systems designed to create a more immersive sound environment by using multiple speakers around the listener.

Monopoly

A market structure where a single seller controls the entire market for a product or service, having significant market power.

Profit

The financial gain derived from the difference between the revenue earned from selling a good or service and the costs associated with its production and sale.

Marginal Revenue

The additional revenue that is gained from selling one more unit of a good or service.