Question
Direct method and sequential method of distributing service department costs A manufacturing company has two service and two production departments. Building Maintenance and Factory Office
Direct method and sequential method of distributing service
department costs
A manufacturing company has two service and two production
departments. Building Maintenance and Factory Office are the
service departments. The production departments are Assembly
and Machining.
The following data have been estimated for next year's
operations:
Direct labor hours: Assembly, 80,000; Machining, 40,000
Floor space occupied: Factory Office, 10%; Assembly, 40%;
Machining, 50%
LO2
LO2
LO3
LO5
LO5
218 Principles of Cost Accounting
Required:
Prepare flexible budgets for factory overhead at the 1,000, 2,000,
and 4,000 unit levels. (Hint: You must first decide which of the
listed costs should be considered variable and which should be
fixed.)
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