Hwang Management Consulting Company has two departments—accounting services and consulting services. For a given period, the following costs were incurred by the company as a whole: direct materials,

$120,000; direct labour, $60,000; and consulting services overhead, $78,000. The total costs were $258,000.

The accounting services department incurred 80 percent of the directmaterials costs, but only 20 percent of the direct-labour costs. Overhead incurred by each department was allocated to projects in proportion to the direct-labour costs of projects within the departments.

Three projects were produced:

The overhead incurred by the accounting services department and allocated to all projects therein amounted to the following: accounting services, $36,000;
consulting services, $42,000.

1. Compute the total costs incurred by the accounting services department and added by the consulting services department.
2. Compute the total costs of each project if all projects were completed.

Transcribed Image Text:

PROJECTS X-1 Y-1 DIRECT MATERIALS DIRECT LABOUR 50% 33% 25 33% Z-1 25 33% Total for the accounting services department 100% 100% X-1 33% 40% Y-1 33% 40 Z-1 Total added by consulting services department 100% 33% 20 100%