Required:
a. If the company uses the direct method of service department cost distribution, how much will the Machinery Department apply as factory overhead if it uses 13,500 direct labor hours?
b. Assume that the company uses the reciprocal method in distributing service department costs and that the Packaging department applies factory overhead based on requisitions. How much is the over/(under) applied factory overhead if there are 4,250 requisitions and actual factory overhead incurred by the department was P1,173,398? Indicate overapplied as a positive number, ex. 123456, and underapplied as a number in a parenthesis, ex. (123456).
Extracted text: leang Corporation has two service departments and three producing departments. The following were gathered from their operations: Service Departments P500,000 540,000 Maintenance Storeroom Producing Departments 1,200,000 1,784,000 872,000 Machinery Assembly Packaging A factory survey revealed the following: Maintenance Number of Direct Requisitions Labor Hours Departments Services Maintenance 400 Storeroom 14% Machinery 32% 3,500 20,000 36,000 18,000 Assembly 26% 6,000 Packaging 28% 4,100 The costs of the maintenance department are allocated on the basis of percent of services rendered while the costs of the Storeroom department are allocated based on number of requisitions.