1 2 Robinson Company Example Home Insert Page Layout Formulas A Data Review View B C D E F G SUPPORT DEPARTMENTS OPERATING DEPARTMENTS Engineering and Production Materials Control Management Machining Assembly Total 3 Budgeted overhead costs 4 before any interdepartment cost allocations $300,000 $264,000 $329,000 $227,000 $1,120,000 5 Support work furnished: 6 By Engineering and Production Control 7 Budgeted engineering salaries 8 Percentage 9 By Materials Management 10 11 Budgeted material-handling labor-hours Percentage 400 10% $ 36,000 $ 60,000 $ 24,000 $ 120,000 30% 50% 20% 100% 800 2,800 4,000 20% 70% 100% 1 Direct Method Home Insert Page Layout Formulas A Data Review View B C D E SUPPORT DEPARTMENTS Engineering OPERATING DEPARTMENTS F G and Production Materials 2 Control Management Machining Assembly Total 3 Budgeted overhead costs 4 before any interdepartment cost allocations $300,000 $264,000 $329,000 $227,000 $1,120,000 5 Allocation of Engg. And Prod. Control (5/7, 2/7)a (300,000) 214,286 85,714 6 Allocation of Materials Management (2/9, 7/9)b (264,000) 58,667 205,333 7 8 Total budgeted overhead of operating departments $ 0 $ 0 $601,953 $518,047 $1,120,000 9 10 Base is ($60,000 + $24,000), or $84,000; $60,000 $84,000 = 5/7; $24,000 $84,000 = 2/7. 11 Base is (800 + 2,800), or 3,600 hours; 800 3,600 = 2/9; 2,800 3,600 = 7/9. 1 Step-Down Method Home Insert Page Layout Formulas A Data Review View B C D SUPPORT DEPARTMENTS Engineering OPERATING DEPARTMENTS F and 2 Production Materials Control Management Machining Assembly Total 3 Budgeted overhead costs before any 4 interdepartment cost allocations $300,000 $264,000 $329,000 5 Allocation of Engg. and Prod. Control (3/10, 5/10, 2/10) a (300,000) 90,000 150,000 $227,000 60,000 $1,120,000 6 354,000 7 Allocation of Materials Management (2/9, 7/9) b (354,000) 78,667 275,333 8 9 Total budgeted overhead of operating departments 0 0 $557,667 $562,333 $1,120,000 10 11 'Base is ($36,000+ $60,000+ $24,000), or $120,000; $36,000+ $120,000 = 3/10; $60,000 $120,000 = 5/10; $24,000+ $120,000 = 2/10. 12 Base is (800 + 2,800), or 3,600 hours; 800 3,600 = 2/9; 2,800 3,600 = 7/9. 1 Reciprocal Method Home Insert Page Layout Formulas A Data Review View B C D E SUPPORT DEPARTMENTS Engineering OPERATING DEPARTMENTS F G and Production 2 Materials Control Management Machining Assembly Total 3 Budgeted overhead costs before any 4 interdepartment cost allocations $300,000 $264,000 $329,000 $227,000 $1,120,000 5 Allocation of Engg. & Prod. Control (3/10, 5/10, 2/10) a (336,495) 100,949 168,247 67,299 6 Allocation of Materials Management (1/10, 2/10, 7/10) b| 36,495 (364,949) 72,990 255,464 7 8 Total budgeted overhead of operating departments 0 0 $570,237 $549,763 $1,120,000 9 10 Base is ($36,000+ $60,000+ $24,000), or $120,000; $36,000 $120,000 = 3/10; $60,000 $120,000 = 5/10; $24,000 $120,000 = 2/10. 11 Base is (400+ 800 + 2,800), or 4,000 hours; 400 4,000 = 1/10; 800 4,000 = 2/10; 2,800 4,000 = 7/10.