Question
In: Accounting
Rose Company has two production departments: Fabricating (P1) and Finishing (P2), and three support departments: Human...
- Rose Company has two production departments: Fabricating (P1) and Finishing (P2), and three support departments: Human Resources (S1), Plant Security (S2), and Maintenance (S3). Budgeted support department costs and the direct overhead of the production departments for 2020 are as follows:
Department: Budget Costs:
(S1) Human resources $80,000
(S2) Plant security $56,000
(S3) Maintenance $63,000
Department: Direct overhead:
(P1) Fabricating $280,000
(P2) Finishing $340,000
Rose allocates support department costs using the following activity drivers: Human Resources (number of employees), Plant Security (direct labor hours), and Maintenance (machine hours). Assume a service department does not provide services to itself. Budgeted 2020 support department driver consumption (by department) is as follows:
Driver: (S1) (S2) (S3) (P1) (P2) total
Number of employees= 0 20 20 90 70 200
direct labor hours= 400 0 1,200 3,200 3,200 8,000
Machine hours= 0 102 0 612 306 1,020
Use the direct method to calculate the total overhead for each production department. Round to 4 decimal places (e.g. $1.0000).
Solutions
Expert Solution
| Allocation base | |||||
| Cost driver base | Total cost | Fabricating | Finishing | Total | Cost per cost driver |
| No. of employees for HR | $ 80,000 | 70 | 200 | 270 | $ 296.2963 |
| Direct labor hours for plant security | $ 56,000 | 3200 | 8000 | 11200 | $ 5 |
| Machine hours for maintenance | $ 63,000 | 306 | 1020 | 1326 | $ 47.5113 |
| Department | ||
| Particulars | Fabricating | Finishing |
| Allocation of HR cost of $80,000 | $ 20,740.7410 | $ 59,259.2600 |
| Allocation of Plant security cost of $56,000 | $ 16,000 | $ 40,000 |
| Allocation of HR cost of $63,000 | $ 14,538.4578 | $ 48,461.5260 |
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ekkarill92 answered 1 year agoRelated Solutions
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Prepare a schedule allocating the support department costs to
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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.
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10%
40%
50%
S2
20%
-
50%
30%
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£4,500
£8,000
£10,000
£15,000
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a.
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Prepare a schedule allocating the support...
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