Question

In: Accounting

The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for...

The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year:

Factory Administration $ 1,063,750
Custodial Services 125,540
Personnel 39,520
Maintenance 155,140
Machining—overhead 969,100
Assembly—overhead 875,450
Total cost $ 3,228,500

The company allocates service department costs to other departments in the order listed below.

Department Number of
Employees		 Total
Labor-
Hours		 Square
Feet of
Space
Occupied		 Direct
Labor-
Hours		 Machine-
Hours
Factory Administration 27 — 11,700 — —
Custodial Services 11 13,400 2,900 — —
Personnel 14 17,400 12,600 — —
Maintenance 58 44,700 16,800 — —
Machining 100 150,000 52,500 46,000 232,000
Assembly 150 200,000 17,500 229,000 29,000
360 425,500 114,000 275,000 261,000


Machining and Assembly are operating departments; the other departments are service departments. Factory Administration is allocated based on labor-hours; Custodial Services based on square feet occupied; Personnel based on number of employees; and Maintenance based on machine-hours.

Required:

1. Allocate service department costs to consuming departments by the step-down method. Then compute predetermined overhead rates in the operating departments using machine-hours as the allocation base in Machining and direct labor-hours as the allocation base in Assembly.

2. Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in Machining and Assembly.

3. Assume that the company doesn’t bother with allocating service department costs but simply computes a single plantwide overhead rate that divides the total overhead costs (both service department and operating department costs) by the total direct labor-hours. Compute the plantwide overhead rate.

4. Suppose a job requires machine and labor time as follows:

Machine-
Hours		 Direct
Labor-Hours
Machining Department 270 29
Assembly Department 19 80
Total hours 289 109

Using the overhead rates computed in (1), (2), and (3) above, compute the amount of overhead cost that would be assigned to the job if the overhead rates were developed using the step-down method, the direct method, and the plantwide method.

Solutions

Expert Solution


ekkarill92 answered 3 months ago
Next > < Previous

Related Solutions

The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for...
The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year: Factory Administration $ 766,800 Custodial Services 275,640 Personnel 38,300 Maintenance 55,860 Machining—overhead 922,200 Assembly—overhead 777,800 Total cost $ 2,836,600 The company allocates service department costs to other departments in the order listed below. Department Number of Employees Total Labor- Hours Square Feet of Space Occupied Direct Labor- Hours Machine- Hours Factory Administration 28 — 14,200 — — Custodial Services 12 8,000...
The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for...
The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year: Factory Administration $ 819,840 Custodial Services 98,337 Personnel 26,358 Maintenance 170,555 Machining—overhead 1,126,484 Assembly—overhead 618,226 Total cost $ 2,859,800 The company allocates service department costs to other departments in the order listed below. Department Number of Employees Total Labor- Hours Square Feet of Space Occupied Direct Labor- Hours Machine- Hours Factory Administration 30 — 5,300 — — Custodial Services 11 15,900...
Maddock Company has two service departments and two producing departments.             Budgeted costs and budgeted activity...
Maddock Company has two service departments and two producing departments.             Budgeted costs and budgeted activity in the various departments for last year are       shown below. (show all calculations) Departments                                 2 Service Departments                       2 Production Custodial Services Cafeteria Cutting Department Assembly Department Department overhead costs $50,400 $28,000 $120,000 $200,000 Square meters occupied 500 1,000 4,000 5,000 Number employees 10 15 75 100 Machine hours 10,000 15,000       Service department costs are allocated to producing department with the costs of...
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably...
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Level of Activity Low High   Direct labor-hours 47,100 62,800   Total factory overhead costs $ 249,500 $ 280,900 The factory overhead costs above consist of indirect materials, rent, and...
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably...
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Level of Activity Low High Direct labor-hours 45,600 60,800 Total factory overhead costs $ 234,300 $ 257,100 The factory overhead costs above consist of indirect materials, rent, and...
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably...
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Level of Activity Low High   Direct labor-hours 74,700 99,600   Total factory overhead costs $ 303,860 $ 348,680 The factory overhead costs above consist of indirect materials, rent, and...
A company's budgeted manufacturing costs for 75,000 units are as follows:
A company's budgeted manufacturing costs for 75,000 units are as follows: Fixed manufacturing costs $15,000 Variable manufacturing costs $18.00 per unit The company produced 70,000 units. Under a flexible budget, how much are budgeted total manufacturing costs? $1,380,000 $1.260,000 $1,365,000 $1,275,000
Burton Co. requests assistance allocating costs and determining the profitability of its two departments: Skis and...
Burton Co. requests assistance allocating costs and determining the profitability of its two departments: Skis and Snowboards. Shared indirect expenses include rent and supervision. Use the Tableau Dashboard, with information from Burton’s December 31 year-end reports, for our analysis. 1. Allocate each of the indirect expenses (rent and supervision) to the two departments: Skis and Snowboards. 2. Prepare departmental income statements for Skis and Snowboards.
P.F Steel Industries Co. uses the step method for allocating the costs of its service departments...
P.F Steel Industries Co. uses the step method for allocating the costs of its service departments to operating departments. The company has two support departments (Human Resource and Information Technology) and two operating departments (Hot Rolled Hollow Steel and Cold Rolled Hollow Steel). P.F. Industries Co. decided to allocate Human Resource department costs based on the number of employees in each department and Information Technology costs based on the number of machine hours in each department. Required: a- Give a...
Answer the following question Alexandria general hospital has 4 departments; Budgeted costs Number of employees Square...
Answer the following question Alexandria general hospital has 4 departments; Budgeted costs Number of employees Square meter The hospital 2,100,000 L.E 47 employees 4000 m2 Internal medicine 650,000 L.E 15 employees 1000 m2 Human resources 300,000 L.E 10 employees 700 m2 Surgery 980,000 L.E 14 employees 1500 m2 Building maintenance 170,000 L.E 8 employees 800 m2 Allocate the support department costs using the direct method ?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT