Question
Cooper Ltd manufactures home security devices. The firm has two production departments: the Fabrication Department and the Assembly Department. The firm also has three support
Cooper Ltd manufactures home security devices. The firm has two production departments: the Fabrication Department and the Assembly Department. The firm also has three support departments: the Engineering Department, the Information Technology Department, and the Purchasing Department. The usage of these three support departments output for 2018 was as follows:
| ||||||
| User of Services | |||||
Support departments | Production departments | |||||
Provider of Services | Engineering | Information Technology |
Purchasing | Fabrication | Assembly | |
Engineering | 0% | 0% | 0% | 40% | 60% | |
Information Technology | 25% | 0% | 10% | 25% | 40% | |
Purchasing | 8% | 7% |
0% | 45% | 40% | |
The budgeted department costs in 2018 were as follows:
Support Departments: |
|
Engineering | 300,000 |
Information Technology | 250,000 |
Purchasing | 250,000 |
| 800,000 |
|
|
Production Departments: |
|
Fabrication | 625,000 |
Assembly | 78,000 |
| 703,000 |
Total Overhead Costs | 1,503,000 |
Use the step-down method to allocate the budgeted costs of the Engineering Department, Information Technology Department and Purchasing Department to the Fabrication Department and the Assembly Department.
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