The Western Mountain Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows:...
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The Western Mountain Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: (Click the icon to view the department overhead budgets.) Support departments: Building and grounds Personnel General plant administration Cafeteria: Operating loss Storeroom Operating departments: Machining Assembly Total for support and operating departments $ $ 52,500 1,650 19,435 105 360 34,000 48,900 74,050 82,900 $ 156,950 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: (Click the icon to view the data.) Department Building and grounds Personnelª Direct Manufacturing Number of General plant administration Cafeteria: operating loss Storeroom Machining Assembly Labor-Hours Employees Occupied 0 0 0 0 0 35 7,000 im 0 10 5,000 0 5 4,000 50 100 Total aBasis used is number of employees 12,000 16,000 Square Feet of Indirect Floor Space Manufacturing Labor-Hours 200 0 1,000 6,000 35,000 296,000 350,000 0 0 0 2,000 3,000 5,000 10,800 20,800 Number of Requisitions 0 0 0 0 0 3,000 1,000 4,000 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. 2. Using the direct method, rework requirement 1. 3. Based on the following information about two jobs, determine the total overhead costs for each job by using rates developed in (a) requirement 1 and (b) requirement 2. Direct Manufacturing Labor-Hours Assembly Job 88 1 Job 89 5 21 4. The company evaluates the performance of the operating department managers on the basis of how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained in requirements 1 and 2? Explain. Machining 24 The Western Mountain Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: (Click the icon to view the department overhead budgets.) Support departments: Building and grounds Personnel General plant administration Cafeteria: Operating loss Storeroom Operating departments: Machining Assembly Total for support and operating departments $ $ 52,500 1,650 19,435 105 360 34,000 48,900 74,050 82,900 $ 156,950 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: (Click the icon to view the data.) Department Building and grounds Personnelª Direct Manufacturing Number of General plant administration Cafeteria: operating loss Storeroom Machining Assembly Labor-Hours Employees Occupied 0 0 0 0 0 35 7,000 im 0 10 5,000 0 5 4,000 50 100 Total aBasis used is number of employees 12,000 16,000 Square Feet of Indirect Floor Space Manufacturing Labor-Hours 200 0 1,000 6,000 35,000 296,000 350,000 0 0 0 2,000 3,000 5,000 10,800 20,800 Number of Requisitions 0 0 0 0 0 3,000 1,000 4,000 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. 2. Using the direct method, rework requirement 1. 3. Based on the following information about two jobs, determine the total overhead costs for each job by using rates developed in (a) requirement 1 and (b) requirement 2. Direct Manufacturing Labor-Hours Assembly Job 88 1 Job 89 5 21 4. The company evaluates the performance of the operating department managers on the basis of how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained in requirements 1 and 2? Explain. Machining 24
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1 Allocation using the StepDown Method Allocation Order Building and grounds Personnel General plant administration Cafeteria Storeroom Step 1 Allocate costs from Building and grounds to other support ... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
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