Question

Factory Overhead Budget
Service Department 1 handles personnel matters. The firm anticipates having 12 factory employees and expects the variable costs to operate the personnel department to average $1,000 per employee. The cost of this department is allocated to other departments on the assumption that there will be three employees in the maintenance department, five employees in the molding department, and four employees in the smoothing department. The personnel department’s fixed
costs are estimated to be $15,000 and will be allocated on a lump sum basis at $3,000 to maintenance, $6,000 to molding and $6,000 to smoothing.
The maintenance department is budgeted to make 100 service calls during the period, 60 calls for the molding department and 40 calls for the smoothing department. The maintenance manager estimates that it will cost an average of $150 in variable costs per service call. The fixed costs of $14,000 are thought to benefit the two production departments equally.
The molding department is expected to incur $29,000 in variable overhead and $42,000 in fixed overhead. The smoothing department is expected to have $32,000 in variable overhead and $8,000 in fixed overhead.
Management has decided to allocated 60% of the fixed overhead cost of molding to XL1 and 40% to XL2 and split the fixed smoothing costs evenly between the two products. Variable costs will be allocated based on direct labor hours.

Direct Labor                     

Molding                                 

XL1: 0.5, XL2: 0.4

Smoothing

XL1: 0.3, XL: 0.2

Std Cost = 15

Personnel Dept

Factory 12 employees

Maintenance 3 employees

Molding 5 employees

Smoothing 4 employees

Variable Cost 1,000 per employee

Fixed Cost 15,000

Maintenance 3,000

Molding 6,000

Smoothing 6,000

Maintenance Dept     

Service Calls 100

Molding 60

Smoothing 40

Variable Cost 150 per service call

Fixed Cost 14,000

Molding 50%

Smoothing 50%

Molding Dept

Variable Cost 29,000

Fixed Cost 42,000

XL1    60%

XL2     40%

Smoothing Dept

Variable Cost 32,000

Fixed Cost 8,000

XL1 50%

XL2 50%

Help Calculate based on above data:

Cost Per direct labor hour

Cost per unit of XL1

Cost per unit of XL2

Fixed Costs charged to production XL1

Cost per unit of XL1

Fixed Costs charged to production of XL2

Cost per Unit of XL2

Answer 1

Here some information is not missing, Units are required of each product in each department to calculate no. of direct labour hours on which variable overhead can be apportioned to two products. Further all other allocations are done. you can use this information for calculating direct labour hours because hrs per unit is only given and if not then allocate on the basis of hrs given. Futher fixed costs are allocated as per the details given.