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Shared Service Department Problem Set PW Manufacturing produces machine parts on a job-order basis.Most business is obtained through bidding.Most firms competing with PW bid full

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Shared Service Department Problem Set

PW Manufacturing produces machine parts on a job-order basis.Most business is obtained through bidding.Most firms competing with PW bid full cost plus a 20 percent markup.Recently, with the expectation of gaining more sales, PW reduced its markup from 25 percent to 20 percent.The company operates two service departments and two producing departments.The budgeted costs and the normal activity levels for each department are as follows:

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Service Departments Producing Departments A B C D Overhead costs $100,000 $200,000 $100,000 $50,000 Number of employees 8 7 30 30 Maintenance hours 2,000 200 6,400 1,600 Machine hours 10,000 1,000 Labor hours 1,000 10,000 0Support Departments Production Departments S1 $2 P1 P2 Check figures -- This isn't part of a formal model, but they are very helpful! Direct Costs S S S Total S costs to be allocated =S1$+S2$ Normal Activity Totals S1 driver --- XXX XXX XXX S1 Driver total S2 driver XXX XXX XXX S2 Driver Total Proportion of Driver Used by Which of these you calculate will depend on the method you are using. S1 $2 P1 P2 Ranking Calculations: S1 S1-->$2 =d5/g5 S2 $2-->S1 =c6/g6 Support Departments Production Departments How you fill these cells out (and which ones) will depend on the method you are using) S1 S2 P1 P2 Check figures Direct Costs S $ $ $ SUM c16 +d16 Allocated Costs: S1 SUM e18 +f18 S2 SUM e19 + f19 Total Allocated e18+e19 f18+f19 NOTE: This is JUST the total service departr Total Costs After Allocation e20+e16 f20+f16 NOTE: This is the TOTAL COST for the Produ Departmental Driver Production Department OHD Rate

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