Question

In: Accounting

Allocating Service Department Costs: Allocation Basis Alternatives Weld-Rite Fabricators has two producing departments, P1 and P2,...

Allocating Service Department Costs: Allocation Basis Alternatives
Weld-Rite Fabricators has two producing departments, P1 and P2, and one service department, S1.
Estimated directed overhead costs per month are as follows:

P1 $450,000
P2 750,000
S1 273,000


Other data follow:

P1 P2
Numbers of employees 150 50
Production capacity (units) 100,000 60,000
Space occupied (square feet) 5,000 15,000
Five-year average of S1's service output used 65% 35%

For each of the following allocation bases, determine the total estimated overhead cost for P1 and P2 after allocating S1 cost to the producing departments.

P1 P2
1. Based on number of employees Answer Answer
2. Production capacity in units Answer Answer
3. Space occupied Answer Answer
4. Five-year average of S1 service used Answer Answer
5. Estimated direct overhead costs Answer Answer

Solutions

Expert Solution

P1 P2
1. Based on number of employees 654750 818250
2. Production capacity in units 620625 852375
3. Space occupied 518250 954750
4. Five-year average of S1 service used 627450 845550
5. Estimated direct overhead costs 552375 920625
Workings:
1
P1 P2
Direct overhead costs 450000 750000
273000/(150+50)*150 204750
273000/(150+50)*50 68250
Total 654750 818250
2
P1 P2
Direct overhead costs 450000 750000
273000/(100000+60000)*100000 170625
273000/(100000+60000)*60000 102375
Total 620625 852375
3
P1 P2
Direct overhead costs 450000 750000
273000/(5000+15000)*5000 68250
273000/(5000+15000)*15000 204750
Total 518250 954750
4
P1 P2
Direct overhead costs 450000 750000
273000*65% 177450
273000*35% 95550
Total 627450 845550
5
P1 P2
Direct overhead costs 450000 750000
273000/(450000+750000)*450000 102375
273000/(450000+750000)*750000 170625
Total 552375 920625

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2)....
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Allocation of support departments S1 S2 P1 P2 S1              - 10% 40% 50% S2 20% - 50% 30% Direct costs £4,500 £8,000 £10,000 £15,000         Required: a. Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. b. Prepare a schedule allocating the support...
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2)....
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Allocation of support departments S1 S2 P1 P2 S1              - 10% 40% 50% S2 20% - 50% 30% Direct costs £4,500 £8,000 £10,000 £15,000         Required: a. Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. b. Prepare a schedule allocating the support...
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2)....
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Allocation of support departments S1 S2 P1 P2 S1              - 10% 40% 50% S2 20% - 50% 30% Direct costs £4,500 £8,000 £10,000 £15,000         Required: a. Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. b. Prepare a schedule allocating the support...
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2)....
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Allocation of support departments S1 S2 P1 P2 S1              - 10% 40% 50% S2 20% - 50% 30% Direct costs £4,500 £8,000 £10,000 £15,000         Required: a. Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. b. Prepare a schedule allocating the support...
Craylon Corp has two service departments, S1 and S2, and two production departments, P1 and P2....
Craylon Corp has two service departments, S1 and S2, and two production departments, P1 and P2. The data for April were as follows: Services provided to: Activity Costs S1 S2 P1 P2 S1 $100,000 25% 40% 35% S2 $80,000 10% 55% 35% Fixed Costs P1 $400,000 P2 $500,000 One of the algebraic equations in linear form for an activity using the reciprocal method is S2 = 80,000 +.25S1 S1=100,000 + .25S2 S2 = 80,000 + .35S1 S1 = 100,000 +.10S2
Campaign Printing has two service departments, S1 and S2, and two production departments, P1 and P2....
Campaign Printing has two service departments, S1 and S2, and two production departments, P1 and P2. The data for May were as follows: Services provided to: Activity Pre-allocation Costs S1 S2 P1 P2 S1 $90,000 10% 40% 50% S2 $60,000 20% 55% 25% Pre-allocation Costs P1 $360,000 P2 $520,000 Required: Allocate service departments costs (S1 & S2) to the production departments (P1 & P2) using reciprocal method Set up linear equations to solve for the total costs incurred in S1...
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...
BETA Ltd has two production departments (P1 and P2) in its factory. Overheads in each department...
BETA Ltd has two production departments (P1 and P2) in its factory. Overheads in each department are currently absorbed into product costs on the basis of machine hours worked. The production overhead absorption rate in Department P1 is K5·60 per machine hour. In Department P2 the absorption rate is to be established from the following data relating to the department for a period: K Allocated production overheads 24,260 Apportionment of factory level production overheads 37,539 Apportionment of service department production...
A company produces a product in two departments, P1 and P2. The company has two support...
A company produces a product in two departments, P1 and P2. The company has two support departments, S1 and S2. The company allocates S1 costs to other departments based on square meters and S2 costs based on machine hours. SUPPORT DEPARTMENTS PRODUCTION DEPARTMENTS S1 S2 P1 P2 TOTAL COSTS    500 120 350 150 1,120 SQUARE METERS 1000 1600 2400 4000 9000 MACHINE HOURS 200 375 1600 200 2375 TOTAL COSTS 500 120 350 150 1,120 a) (20 pts) Use the...
Question 4: Service department cost allocation Inns Battery Company has two service departments: Maintenance and Personnel....
Question 4: Service department cost allocation Inns Battery Company has two service departments: Maintenance and Personnel. Maintenance Department costs are allocated on the basis of budgeted maintenance-hours. Personnel Department costs are allocated based on the number of employees. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance Department Personnel Department A B Budgeted costs $180,000 $30,000 $80,000 $120,000 Budgeted maintenance-hours n/a 240 720 240 Number of employees 20 n/a 60 120 Required: 4a....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT