Question

problem 15-30. Costs Support departments Buildings and grounds Personnel General plant administration Cafeteria: operating costs Storeroom Operating departments Machining Assembly 45000 7800 36120 20670 18300 127890 Immo-NM 36000 60000 96000 Total 223890

solve using step down method

Answer 1

	Support Departments					Operating depatments
	Buildings and grounds	Personnel	General plant administration	Cafeteria	Storeroom	Machining	Assembly	Total
Departmental cost before allocation	45000	7800	36120	20670	18300	36000	60000	223890
Allocations :
department buildings and Grounds cost	-45000	450	2160	810	1080	3960	36540	45000
Department Personnel cost		-7800	1248	312	156	1716	4368	7800
Department general plant administration cost			-36120	2463	1642	10672	21433	36120
Department Cafeteria cost				-20670	0	5167	15503	20670
					-18300	10000	8300	18300
						67515	146144

Basis of allocation :-

• Buildings and grounds cost is allocated on the basis of sq. feet area.
• Personnel cost is allocated on the basis of no. of employees.
• General plant administration cost is allocated on the basis of indirect labor hour.
• Cafeteria cost is allocated on the basis of direct labor hours as it is mentioned as operating cost.
• Storeroom cost is allocated on the basis of no. of requisitions.