Question
Support Departments Producing Departments Personnel Maintenance Fabrication Assembly Budgeted overhead $160,000 $288,000 $560,000 $640,000 Direct labor hours 8,000 10,000 32,000 40,000 Machine hours 12,000 15,000
Support Departments Producing Departments Personnel Maintenance Fabrication Assembly Budgeted overhead $160,000 $288,000 $560,000 $640,000 Direct labor hours 8,000 10,000 32,000 40,000 Machine hours 12,000 15,000 48,000 32,000 Number of employees 16 20 60 100
| Support Departments | Producing Departments | |||
| Personnel | Maintenance | Fabrication | Assembly | |
| Budgeted overhead | $160,000 | $288,000 | $560,000 | $640,000 |
| Direct labor hours | 8,000 | 10,000 | 32,000 | 40,000 |
| Machine hours | 12,000 | 15,000 | 48,000 | 32,000 |
| Number of employees | 16 | 20 | 60 | 100 |
The company does not divide costs into fixed and variable components. Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours.
Predetermined overhead rates for fabrication and assembly are based on direct labor hours. (Round to the nearest dollar).
12. The amount of maintenance costs allocated to the Assembly Department using the direct method would be
| Direct method: Allocation proportion = 32,000/80,000 = 0.40 Cost allocation: 0.4 x $288,000 = $115,200 |
1. Where did 80,000 come from?
2. why is $288,000 being used?
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Financial and Managerial Accounting
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
12th edition
978-1133952428, 1285078578, 1133952429, 978-1285078571
