Question

In: Accounting

Rose Company has two production departments: Fabricating (P1) and Finishing (P2), and three support departments: Human...

  1. 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

For any clarification, please comment. Kindly Up Vote!

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

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...
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...
Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating...
Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments _________Human Resources______    General Factory____ Fabricating______Assembly Direct costs ___$160,000___________    $350,000 ______    $114,200_______ $95,000 Normal activity: Number of employees______ — _________ 60__________    80____________    170 Square footage    ________1,000 _______    — __________ 5,700___________13,300 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory...
Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating...
Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct costs $160,000 $330,000 $114,200 $95,000 Normal activity: Number of employees — 60 80 170 Square footage 1,000 — 5,700 13,300 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now...
Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating...
Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct costs $150,000 $330,000 $114,800 $94,000 Normal activity: Number of employees — 60 80 170 Square footage 1,000 — 5,700 13,300 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now...
A Company has two support departments (Administration and Janitorial) and three producing departments (Fabricating, Assembly, and...
A Company has two support departments (Administration and Janitorial) and three producing departments (Fabricating, Assembly, and Finishing). Costs and activities are as follows:                                          Administration      Janitorial       Fabricating       Assembly      Finishing Direct costs........................      $50,000            $30,000         $40,000         $50,000         $25,000 Number of employees.......                                        10                  30                  40                  20 Square feet........................          2,000                                    10,000           28,000           15,000 Direct labor hours..............                                                         5,000             6,000             2,000 Administrative services are allocated based on the number of employees; janitorial services are allocated based on square footage. Overhead rates for...
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
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT