The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as

Question

The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year Factory Administration Custodial Services Personnel Maintenance Machining overhead Assembly-overhead Total cost $1, 029, 860 185, 588 36, 088 132, 034 621, 026 467, 284 $2. 471. 880 The company allocates service department costs to other departments in the order listed below. Square Total Feet of Direct Number of Labor Space Labor Machine Department Employees Hours Occupied Hours Hours - Factory Administration Custodial Services Personnel Maintenance Machining Assembly 27 11 16 56 72 108 11, 100 15, 500 13, 800 46, 800 80, 000 240, 000 10, 500 5,000_ 19, 800- 90, 000 82, 000 30, 000 143, 400 95, 600 240, 000

Explanation / Answer

4) Step down method = 225*$8.25+16*$5.37 =$1942.17

1) Step down method Factory Cusodial Personnel Maintenance Machining Assembly Admn services Operating department costs $6,21,026 $4,67,284 Costs to be allocated $10,29,860 $1,85,588 $36,088 $1,32,034 Allocation: Factory administration (Based on Labour Hour ) -$10,29,860 $40,300 $35,880 $1,21,680 $2,08,000 $6,24,000 Custodial services -$2,25,888 $7,800 $30,888 $1,40,400 $46,800 Personnel ( No. of Employees) -$79,768 $18,928 $24,336 $36,504 Maintenance ( Based on Machine Hour) -$3,03,530 $1,89,706 $1,13,824 Total overhead after allocation $11,83,468 $12,88,412 Predetermined OH rate $8.25 $5.37

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