Solve the allocation question with three methods. 1. direct method, 2. step down method. 3. reciprocal method.
Homework Answers
1) direct method of manufacturing overhead costs allocation :
| support departments | operating departments | ||||
| desciption | plant maintenance | information systems | machining | assembly | total |
| budgeted manufacturing overhead costs before allocations | $600000 | $116000 | $400000 | $200000 | $1316000 |
| allocations : | |||||
| plant maintenance (2400/6400, 4000/6400) | ($600000) | $225000 | $375000 | $600000 | |
| information systems (1600/1800, 200/1800) | ($116000) | $103111 | $12889 | $116000 | |
| total overhead | $0 | $0 | $728111 | $587889 | $1316000 |
Department plant maintenance’s cost has been allocated on the basis of budgeted labor-hours:
2400 hours + 4000 hours = 6400 hours.
Allocated to department machining: $600000 × (2400/6400) =
$225000
Allocated to department assembly: $600000 × (4000/6400) =
$375000
Department information systems’s cost has been allocated on the basis of budgeted computer hours:
1600 hours + 200 hours = 1800 hours
Allocated to department machining: $116000 × (1600/1800) =
$103111
Allocated to department assembly: $116000 × (200/1800) = $12889
2) step down method of manufacturing overhead costs allocation :
| support departments | operating departments | ||||
| desciption | plant maintenance | information systems | machining | assembly | total |
| budgeted manufacturing overhead costs before allocations | $600000 | $116000 | $400000 | $200000 | $1316000 |
| allocations : | |||||
| plant maintenance (1600/8000, 2400/8000, 4000/8000) | ($600000) | $120000 | $180000 | $300000 | $600000 |
| information systems (1600/1800, 200/1800) | ($236000) | $209778 | $26222 | $236000 | |
| total overhead | $0 | $0 | $789778 | $526222 | $1316000 |
Allocation of department plant maintenance’s cost:
Allocation ratio:
Department information systems: 1600/(1600 + 2400 + 4000 ) =
1600/8000
Department machining: 2400/(3000 + 9000 + 15,000 ) =
2400/8000
Department assembly: 4000/(3000 + 9000 + 15,000 ) = 4000/8000
Allocated to department information systems: $600000 ×
(1600/8000 ) = $120000
Allocated to department machining: $600000 × (2400/8000 ) =
$180000
Allocated to department assembly: $600000 × (4000/8000 ) =
$300000
Allocation of department B’s cost:
Allocation ratio:
Department machining: 1600/(1600 + 200) = 1600/1800
Department assembly: 200/(1600 + 200) = 200/1800
Total cost of department information systems: $116000 + $120000 = $236000
1600 hours + 200 hours = 1800 hours
Allocated to department machining: $236000 × (1600/1800) =
$209778
Allocated to department assembly: $236000 × (200/1800) = $26222
3) reciprocal method of manufacturing overhead costs allocation :
| support departments | operating departments | ||||
| desciption | plant maintenance | information systems | machining | assembly | total |
| budgetedmanufacturing overhead costs before allocations | $600000 | $116000 | $400000 | $200000 | $1316000 |
| allocations : | |||||
| plant maintenance (20%, 30% and 50%) | ($624082 ) | $124816 | $187225 | $312041 | $624082 |
| information systems (10%, 80% and 10%) | $24082 | ($240816) | $192653 | $24081 | $116000 |
| total overhead | $0 | $0 | $779878 | $536122 | $1316000 |
Let:
toal cost of department palnt maintenance = Y
toal cost of department infomation systems = Z
so equations areas under:
Y = $600000 + 0.10Z —— Eq.1
Z = $116000 + 0.20Y —— Eq.2
Substituting the value of Z in equation 1:
Y = $600000 + 0.10($116000 + 0.20Y)
Y = $600000 + $11600 + 0.02Y
Y – 0.02Y = $600000 + $11600
0.98Y = $611600
Y = $611600/0.98
Y = $624081.63 or $624082 (rounded off to $)
Substituting the value of Y in equation 2:
Z = $116000 + 0.20Y
Z = $116000 + 0.20 ($624082)
Z = $116000 + $124816.40 = $240816.40 or $240816 (rounded off to
$)
thank you
please give your feed back and rating
Add Answer to:
Solve the allocation question with three methods. 1.
direct method, 2. step down method. 3. reciprocal...
The following data is available for September 2017: DIRECT ALLOCATION DATA STEP-DOWN ALLOCATION DATA REQUIREMENTS O-books,...
The following data is available for September
2017:
DIRECT ALLOCATION DATA
STEP-DOWN ALLOCATION DATA
REQUIREMENTS
O-books, an online book retailer, has two operating departments—corporate sales and consumer sales—and two support departments—human resources and information systems. Each sales department conducts merchandising and marketing operations independently. O-books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The controller of 0-books reads a widely used textbook that states that "the reciprocal method is conceptually the...
Alfred, owner of Himinus−Tech Fiberglass Fabricators, Inc., is interested in using the reciprocal allocation method. The...
Alfred, owner of Himinus−Tech Fiberglass Fabricators, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis: Budgeted manufacturing overhead costs: Plant Maintenance PM (Support Dept) $320,000 Data Processing DP (Support Dept) $55,000 Machining M (Operating Dept) $215,000 Capping C (Operating Dept) $110,000 Services furnished: By Plant Maintenance (budgeted laborminus−hours): to Data Processing 3,400 to Machining 5,800 to Capping 8,900 By Data Processing (budgeted computer time): to Plant Maintenance 1,100 to Machining 3,550 ...
Requirement 2. Using the direct method, rework requirement 1. Using the direct method, allocate support-department costs....
Requirement 2. Using the direct method, rework requirement 1. Using the direct method, allocate support-department costs. (Round cost allocations to the nearest whole dollar. Use parentheses Operating Departments Support Departments General Cafeteria Plant Operating Bldg and Grounds Personnel Admin. Loss Storeroom Machining Assembly Costs incurred Allocation of costs: Building and grounds Personnel General plant administration Cafeteria Storeroomm Total budgeted costs of operating departments Enter any number in the edit fields and then click Check Answer. ㄧㄨ Data Table Support departments:...
BE 19-3 Support department cost allocation-reciprocal services method Obj. 3 Brewster Toymakers Inc. produces toys for...
BE 19-3 Support department cost allocation-reciprocal services method Obj. 3 Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Security departments support the production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security (Continued) at information is provided in the 19 Support Department and Jollit COUL Department are allocated based on asset value. Relevant department informati following table: Janitorial Security...
Calculate the total overhead costs of the operating departments (Eastern and Western) after the supportdepartment costs...
Calculate the total overhead costs of the operating departments
(Eastern and Western) after the supportdepartment costs of
Engineering and Information Technology have been allocated using
the following methods (showing your calculations in tables and
footnotes, if needed):
a. direct method
b. step-down method (allocate Engineering first)
c. step-down method (allocate Information Technology first)
d. reciprocal method (be sure to show what equations were
used)
Support Departments Operating Departments Information Eastern Western Engineering Technology Department Department Total $300,000 $250,000 $650,000 $920,000...
Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...
Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 16 people, and the Assembly Department employs 79 people. Each person in these two departments works 1,970 hours per year. The production-related overhead costs for the Molding Department are budgeted at $194,000, and the Assembly Department costs are budgeted at $83,000. Two support departments—Engineering and General Factory—directly support the two production...
Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments-administrative...
Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments-administrative services (AS) and information systems (15)—and two operating departments-government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following: SUPPORT ASIS OPERATING GOVT CORP Total $ 600,000 $ 2,400,000 $8,756,000 $ 12,452,000 $ 24,208,000 Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted...
The managers of Yoyodyne Propulsion Systems are discussing ways to allocate the cost of support departments...
The managers of Yoyodyne Propulsion Systems are discussing ways to allocate the cost of support departments such as dua ty Control and Maintenance to the Machining and Assembly production departments. To aid them in this discussion, the controller has provided the following information: Quality Control Maintenance Machining Assembly Total Budgeted overhead costs before allocation $350,000 $200,000 $400,000 $300,000 $1,250,000 50,000 50,000 Budgeted Machine-hours Budgeted Direct manufacturing labor hours 25,000 25,000 Budgeted units of service: - Quality Control 7,000 21,000 18,000...
please help me to solve this problem, Thanks! Problem 48-6 Step-Down Method versus Direct Method; Predetermined...
please help me to solve this problem, Thanks!
Problem 48-6 Step-Down Method versus Direct Method; Predetermined Overhead Rates (L04-10, LO4. The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year. Tactory Administration Custodial Services Personnel Maintenance Machining-overhead Assembly-overhead Total cost $ 819,840 98,337 26, 358 170,555 1,126,484 618.226 $2,859,800 The company allocates service department costs to other departments in the order listed below. Square Total Feet of Direct Number of Labor-...
PhoenixPartners provides management consulting services to government and corporate clients. Phoenix has two support departments—administrative services(AS)...
PhoenixPartners provides management consulting services to government and corporate clients. Phoenix has two support departments—administrative services(AS) and information systems(IS)—and two operating departments—government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following: SUPPORT OPERATING AS IS GOVT CORP Total Budgeted overhead costs before any interdepartment cost allocations $600,000 $2,400,000 $8,756,000 $12,452,000 $24,208,000 Support work supplied by AS (budgeted head count) 0 25% 40% 35% 100% Support work supplied by IS (budgeted computer...
The following data is available for September
2017:
DIRECT ALLOCATION DATA
STEP-DOWN ALLOCATION DATA
REQUIREMENTS
O-books, an online book retailer, has two operating departments—corporate sales and consumer sales—and two support departments—human resources and information systems. Each sales department conducts merchandising and marketing operations independently. O-books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The controller of 0-books reads a widely used textbook that states that "the reciprocal method is conceptually the...
Requirement 2. Using the direct method, rework requirement 1. Using the direct method, allocate support-department costs. (Round cost allocations to the nearest whole dollar. Use parentheses Operating Departments Support Departments General Cafeteria Plant Operating Bldg and Grounds Personnel Admin. Loss Storeroom Machining Assembly Costs incurred Allocation of costs: Building and grounds Personnel General plant administration Cafeteria Storeroomm Total budgeted costs of operating departments Enter any number in the edit fields and then click Check Answer. ㄧㄨ Data Table Support departments:...
BE 19-3 Support department cost allocation-reciprocal services method Obj. 3 Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Security departments support the production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security (Continued) at information is provided in the 19 Support Department and Jollit COUL Department are allocated based on asset value. Relevant department informati following table: Janitorial Security...
Calculate the total overhead costs of the operating departments
(Eastern and Western) after the supportdepartment costs of
Engineering and Information Technology have been allocated using
the following methods (showing your calculations in tables and
footnotes, if needed):
a. direct method
b. step-down method (allocate Engineering first)
c. step-down method (allocate Information Technology first)
d. reciprocal method (be sure to show what equations were
used)
Support Departments Operating Departments Information Eastern Western Engineering Technology Department Department Total $300,000 $250,000 $650,000 $920,000...
Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments-administrative services (AS) and information systems (15)—and two operating departments-government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following: SUPPORT ASIS OPERATING GOVT CORP Total $ 600,000 $ 2,400,000 $8,756,000 $ 12,452,000 $ 24,208,000 Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted...
The managers of Yoyodyne Propulsion Systems are discussing ways to allocate the cost of support departments such as dua ty Control and Maintenance to the Machining and Assembly production departments. To aid them in this discussion, the controller has provided the following information: Quality Control Maintenance Machining Assembly Total Budgeted overhead costs before allocation $350,000 $200,000 $400,000 $300,000 $1,250,000 50,000 50,000 Budgeted Machine-hours Budgeted Direct manufacturing labor hours 25,000 25,000 Budgeted units of service: - Quality Control 7,000 21,000 18,000...
please help me to solve this problem, Thanks!
Problem 48-6 Step-Down Method versus Direct Method; Predetermined Overhead Rates (L04-10, LO4. The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year. Tactory Administration Custodial Services Personnel Maintenance Machining-overhead Assembly-overhead Total cost $ 819,840 98,337 26, 358 170,555 1,126,484 618.226 $2,859,800 The company allocates service department costs to other departments in the order listed below. Square Total Feet of Direct Number of Labor-...
Most questions answered within 3 hours.
-
4) A firm is hit by increases in its wage rate, w.
a) How does this...
asked 9 minutes ago -
A square current loop 5.4 cm on each side carries a 510 mA
current. The loop...
asked 2 hours ago -
What are five tips in conducting knowledge assessment/literature
review research? Each of these tips needs to...
asked 2 hours ago -
Antigen presenting cells link innate and adaptive immune
responses. In the theoretical scenario where phagosomes cannot...
asked 3 hours ago -
Dealing with conflict, in my opinion, is a skill and an art. I
believe that those...
asked 3 hours ago -
6. A long straight wire with circular cross section and radius
1.5 cm carries a 1.2...
asked 3 hours ago -
Deacon Corporation has provided the following financial data
from its balance sheet and income statement:
Year...
asked 4 hours ago -
List and discuss at least three variables from everyday life for
which you expect the variable ...
asked 4 hours ago -
A high-pass filter consists of a 1.60 μF capacitor in series
with a 125 Ω resistor....
asked 4 hours ago -
A newly developed artificial intelligence has trouble
distinguishing hand-written numbers from hand-written alphabets.
There are pictures...
asked 4 hours ago -
The carbonate ion CO3 2- has multiple resonance structures.
a. Draw them and assign the hybridization...
asked 4 hours ago -
In doing an allocation for a basket purchase
Use the individual costs and the total market...
asked 4 hours ago