Question
he Western MountainWesternMountain Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: LOADING... (Click the icon to view the department overhead
he
Western MountainWesternMountain
Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows:
LOADING...
(Click
the icon to view the department overhead budgets.)
Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. These rates are developed after support-department costs are allocated to operating departments. Bases for allocation are to be selected from the following:
LOADING...
(Click
the icon to view the data.)
Read the
requirements
LOADING...
.
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Part 1
Requirement 1. Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate.
Begin by selecting the allocation base for each support department.
Support Department | Allocation Base |
Building and grounds | Square feet of floor space occupied |
Personnel | Number of employees |
General plant administration | Manufacturing labor-hours |
Cafeteria: operating loss | Number of employees |
Storeroom | Number of requisitions |
Part 2
Using the step-down method, allocate support-department costs. Allocate the costs of the support departments in the order given in this problem. (Round all indirect allocation rates to the nearest cent and all other computations to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs.)
Support Departments | Operating Departments | |||||||
General | Cafeteria | |||||||
Bldg and | Plant | Operating | ||||||
Grounds | Personnel | Admin. | Loss | Storeroom | Machining | Assembly | ||
Costs incurred | 45000 | 675 | 30870 | 810 | 8864 | 36600 | 48000 | |
Allocation of costs: | ||||||||
Building and grounds | 45000 | 225 | 2700 | 1800 | 360 | 14400 | 25515 | |
Personnel | (900) | 180 | 90 | 36 | 360 | 234 | ||
General plant administration | (33750 | |||||||
Cafeteria |
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