Use the following to answer questions 1 & 2: In addition to the 3D Printers, Jef

Question

Use the following to answer questions 1 & 2: In addition to the 3D Printers, Jeff's also manufactures cameras and has two support departments: sales and administration. The table below presents a breakdown of how the service departments' work is distributed to the manufacturing departments. Sales departments OH is allocated by sales visits made and administration by the number of employees in eaclh Sales $400,000 Administration $500,000 Total Costs Driver N/A Sales Administration 3D Printers 1,500 500 2,000 N/A 400 95 500 Total Drivers 1. (20 points). Assuming that Jeffs uses the Sequential method and allocates the Administration costs first, how much of the service OH should be allocated to the 3D Printer line? Use the sequential method here. Remember that a percentage of the Administration budgeted costs will go into sales.

Explanation / Answer

Solution 1:

From above service overhead allocated to 3D Printer line = $703,750

From Service Department Cost Allocation - Step Method
(Allocation of Administration First) Service Department Manufacturing Department Sales Administration 3D Printer Cameras Service department cost $400,000.00 $500,000.00 Administration (5:400:95) $5,000.00 -$500,000.00 $400,000.00 $95,000.00 Sales (1500:500) -$405,000.00 $303,750.00 $101,250.00 Total $0.00 $0.00 $703,750.00 $196,250.00

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