Cisco Company has two service departments that support the production. Outlines below is the estimated overhead...
Cisco Company has two service departments that support the production. Outlines below is the estimated overhead by department for the upcoming year.
|
ESTIMATED OH |
# OF EMPLOYEEES |
||
|
Service Departments |
|||
|
Repair |
$40,000 |
10 |
|
|
Tool |
50,000 |
20 |
|
|
Production Departments |
|||
|
Assembly |
$120,000 |
40 |
|
|
Boxing |
100,000 |
20 |
The Repair Department supports the greatest number of departments, followed by the Tool Department. Overhead cost is allocated to departments based upon the number of employees.
- If cisco uses the direct method, for the purposes of product costing, the amount of overhead allocated from the Repair Department to the Tool Department will be
Homework Answers
The amount of overhead allocated from the Repair Department to the Tool Department will be :-
Estimated OH of Repair Department * No of Employees in Tool Dept/Total No of Employees
= $40000 * 20/[20 + 40 + 20]
= $40000 * 20/80 = $10000
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