Question

In: Accounting

The personnel department at Dansford Company has $45,000 in budgeted costs for the coming period.

The personnel department at Dansford Company has $45,000 in budgeted costs for the coming period. Dansford is trying to determine whether to allocate these costs to the two production departments based on the number of employees or based on machine hours used in the department. Information about the production departments is given below:

Molding Engraving

Number of employees 15 35

Anticipated machine hours 600 400

Instructions:

Calculate the costs allocated to each of the production departments using each allocation base.
Which allocation base is preferable?

Expert Solution

Budgeted cost of personnel department = $45,000

Molding Engraving Total

Number of employees 15 35 50

Anticipated machine hours 600 400 1,000

1.

Cost allocation on the basis of Number of employees

Personnel department cost allocated to Molding = Budgeted cost of personnel department x Number of employees in Molding department/Total number of employees

= 45,000 x 15/50

= $13,500

Personnel department cost allocated to Engraving = Budgeted cost of personnel department x Number of employees in Engraving department/Total number of employees

= 45,000 x 35/50

= $31,500

Cost allocation on the basis of Anticipated machine hours

Personnel department cost allocated to Molding = Budgeted cost of personnel department x Anticipated machine hours in Molding department/Total number of Anticipated machine hours

= 45,000 x 600/1,000

= $27,000

Personnel department cost allocated to Engraving = Budgeted cost of personnel department x Anticipated machine hours in Engraving department/Total number of Anticipated machine hours

= 45,000 x 400/1,000

= $18,000

2.

Since personnel department deals with employees, hence budgeted costs of the personnel department, should be allocated on the basis of number of employees of the production departments.

ekkarill92 answered 2 years ago

The following data relate to a manufacturing department for a period: Budgeted data for the coming...

The following data relate to a manufacturing department for a period: Budgeted data for the coming year are as follows: Direct labour hours 60,000 hours Direct labour cost $110,000 Direct material cost $125,000 Production overhead $70,400 Actual data for the period are as follows: Direct labour hours 55,500 hours Direct labour cost $125,000 Direct material cost $150,000 Production overhead $67,800 Required: (7A) Calculate the production overhead absorption rate predetermined for the period based on : Percentage of direct material cost;...

Forest Trails is preparing their budgeted financial statements for the coming period, and has accumulated the...

Forest Trails is preparing their budgeted financial statements for the coming period, and has accumulated the following data: Beginning-of-period balances: Cash: $13,500 Accounts Receivable: $54,000 Raw Materials Inventory: $16,000 Work in Process Inventory: $60,000 Finished Goods Inventory: $24,000 Equipment (historical value): $480,000 Accumulated Depreciation: $288,000 Accounts Payable: $27,000 Estimates for end-of-period balances: Accounts Receivable: $67,500 Raw Materials Inventory: $10,000 Work in Process Inventory: $50,000 Finished Goods Inventory: $29,000 Accumulated Depreciation: $296,000 Accounts Payable: $18,000 Budgeted activity levels for the period:...

Mushed’s String Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are...

Mushed’s String Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance Personnel A B Budgeted costs $320,000 $80,000 $160,000 $240,000 Budgeted maintenance-hours NA 200 240 160...

Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $160,000 are...

Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $160,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $40,000 are allocated based on the number of employees. The costs of operating departments A and B are $80,000 and $120,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance Department Personnel Department A B Budgeted costs $160,000 $40,000 $80,000 $120,000 Budgeted maintenance-hours NA 400...

Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are...

Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted machine-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance Department Personnel Department A B Budgeted costs $300,000 $100,000 $160,000 $240,000 Budgeted maintenance-hours NA 800...

Steven's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are...

Steven's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Department Maint Department Personnel Department A B Budgeted Costs $320,000 $80,000 $160,000 $240,000 Budgeted Maintenance hours NA...

Superman Store has two support departments, Information Systems and Personnel. The Information Systems Department costs are...

Superman Store has two support departments, Information Systems and Personnel. The Information Systems Department costs are allocated on the basis of hours used. The Personnel Department costs are allocated based on the number of employees. Data on information systems hours used and number of employees are as follows: Information Allocation Bases: Systems Personnel Fruit Nut Total cost $120,000 $30,000 $60,000 $90,000 Information systems hours used 600 600 720 480 Number of employees 10 20 40 120 a. Write the equations needed to allocate support department costs using the reciprocal method. b. Solve for the total cost to be allocated under...

Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated...

Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance Department Personnel Department A B Budgeted costs $300,000 $100,000 $160,000 $240,000 Budgeted maintenance-hours NA 800 1,200...

Protein Bars has two support departments, Information Systems and Personnel. The Information Systems Department costs of...

Protein Bars has two support departments, Information Systems and Personnel. The Information Systems Department costs of $120,000 are allocated on the basis of hours used. The Personnel Department costs of $30,000 are allocated based on the number of employees. Costs of the two operating departments are $60,000 for Fruit Bars and $90,000 for Nut Bars. Data on information systems hours used and number of employees are as follows: information hours used = info 600, personnel 600, fruit 720, nut 480....

Bolton Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated...

Bolton Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance Department Personnel Department A B Budgeted costs $300,000 $100,000 $160,000 $240,000 Budgeted maintenance-hours NA 800 1,200...