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Try It 15-1: Aberdeen Corporation has one support department, Engineering Services, and two production departments, Machining and Assembly. The following data relate to the
Try It 15-1: Aberdeen Corporation has one support department, Engineering Services, and two production departments, Machining and Assembly. The following data relate to the 2017 budget for the Engineering Services Department: Practical capacity Fixed costs of the Engineering Services Department in the 6,000 labor-hour to 8,000 labor-hour relevant range Budgeted usage (quantity) of engineering services labor-hours required to support the productions departments: Machining department Assembly department Total Budgeted variable cost per engineering services labor-hour in the 6,000 labor-hour to 8,000 labor-hour relevant range Actual usage (quantity) of Engineering Services labor-hours required to support the production departments: Machining department Assembly department Total 8,000 hours $280,000 2,500 hours 4,500 hours 7,000 hours $25 per hour used 2,000 hours 4,000 hours 6,000 hours 1.Using the single-rate method, calculate the cost to be allocated to the Machining and Assembly Departments if the allocation rate is based on budgeted costs and budgeted quantity of Engineering Services and allocated based on actual Engineering Services hours used in each department. 2.Using the dual-rate method, calculate the cost to be allocated to the Machining and Assembly Departments if (a) variable costs are allocated based on the budgeted variable cost per hour for actual hours used in each department and (b) fixed costs are allocated based on budgeted fixed costs per hour and the budgeted number of hours for each department. 3.Using the single-rate method, calculate the cost to be allocated to the Machining and Assembly Departments if the allocation rate is based on budgeted costs and practical capacity of the Engineering Services Department and allocated based on actual Engineering Services hours used in each department. 4.Using the dual-rate method, calculate the cost to be allocated to the Machining and Assembly Departments if (a) variable costs are allocated based on the budgeted variable cost per hour for actual hours used in each department and (b) the fixed-cost allocation rate is based on budgeted costs and practical capacity of Engineering Services Department and fixed costs are allocated based on budgeted Engineering Service hours used in each department.
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