Question
QUESTION 1 Company X has budgeted costs in its various departments as follows for the coming year: Training $ 375,000.00 Custodial $ 225,000.00 Maintenance $
QUESTION 1
Company X has budgeted costs in its various departments as follows for the coming year:
Training | $ 375,000.00 |
Custodial | $ 225,000.00 |
Maintenance | $ 100,000.00 |
Offset Printing | $ 380,000.00 |
Lithography | $ 524,000.00 |
Total Overhead | $1,604,000.00 |
The company allocates service department costs to other departments, in the order listed below:
Number of Employees | Square Meters Occupied | Press Time Hours | |
Training | 120 | 1,000 | 0 |
Custodial | 200 | 2,000 | 0 |
Maintenance | 400 | 4,000 | 0 |
Offset Printing | 600 | 8,000 | 90,000 |
Lithography | 400 | 24,000 | 30,000 |
Total | 1,720 | 39,000 | 120,000 |
Offset Printing and Lithography are operating departments: the other departments all act in a service capacity. Training is allocated on the basis of number of employees; Custodial on the basis of square meters occupied; and Maintenance on the basis of press time hours.
Required:
- Allocate service department costs to operating departments by the direct method
- Allocate service department costs to operating departments by the step method.
QUESTION 2:
On-board Inc. is a company that manufactures specialty desks for computer gamers. The CEO of this company has decided to move to an Activity Based Costing system. The data from the new ABC system is listed below. Additionally, there are data from one of On Board's customers, Data Tech a software developer, as well.
Overhead Costs | Cost |
Wages and Salaries | $350,000.00 |
Other Overhead Costs | $150,000.00 |
Total Overhead Costs | $500,000.00 |
Activity Cost Pool | Activity Measure | Total Activity for the Year |
Assembly | Number of Direct Labour Hours | 30,000 |
Delivery | Number of Customer Orders | 500 |
Customer Support | Number of Customers | 400 |
Other | costs not allocated to products or customers | N/A |
Distribution of Resource Consumption Across Activities | |||||
Volume-Related | Order-Related | Customer Support | Other | Total | |
Wages and Salaries | 30.00% | 20.00% | 40.00% | 10.00% | 100.00% |
Other Overhead Costs | 50.00% | 10.00% | 20.00% | 20.00% | 100.00% |
Data concerning Data Tech's Order | ||
Units Ordered | 16 | units |
Direct Labour-Hours | 4 | DLHs per unit |
Selling Price | $450.00 | per desk |
Direct Materials | $225.00 | per desk |
Direct Labour | $12.00 | per hour |
Using the above data, complete the following in regards to On Board:
- Compute a report showing first-stage allocations of overhead costs to the activity cost pools.
- Compute the activity rates for the activity cost pools.
- Compute a report showing the overhead costs for the order fromData Tech.
- Compute a report showing the product margin for the order and the customer margin forData Tech
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