Help Save & Exit Lab Exam (Ch 1-13) Check my has two service departments, Custod
ID: 2584939 • Letter: H
Question
Help Save & Exit Lab Exam (Ch 1-13) Check my has two service departments, Custodial Services and Maintenance, and theee production departments, Cutting, Milling, and Assembly The company allocates the cost of Custodial Services on the basts of square foolage and s made between variable and fixed costs Budgeted operating data for the Maintenance on the basis of labor hours No distinction i year just completed follow Square feet a Prepare a schedule to allocate service department costs to the production departments by the direct method b. Prepare a sched Custodial Services first ule to allocate service department costs to the production departments by the step-down method, allocating Complete this question by entering your answers in the table below Required A Required B Pregare a schedule to allocate service department costs to the production departments by the direct method. (Dwgative Prev 3 of 6 Next > PrtScr sersC 6 8 HJExplanation / Answer
Requirement A
Working notes:
Allocation rate for Custodial service department = $57000 / 80000 = $0.71
Cost Allocation
0.71*44000
0.71*26000
Allocation rate for Maintenance department = $45000 / 20000 = $2.25
Cost allocation
Requirement B
Working Notes:
In the step down approach, the service cost with higher cost is first allocated between the other service and operating departments. hence, since custodial service department has higher overhead cost, it is allocated first.
Allocation rate for Custodial service cost = total square feet / total custodial cost
= $133000 / $57000
= 0.43
Maintenance cost allocation
The maintenance cost department cost to be allocated will increase by the cost allocated from the custodial service department cost. The total maintenace cost to be allocated between the operating departments is $67714 (45000+22714).
Allocation rate = 67714 / 20000 = 3.38
Maintenance cost allocation
Service Department Production department Custodial services Maintenance Cutting Milling Assembly Departmental costs $57,000 $45,000 $1,53,000 $1,08,000 $16,80,000 Allocation: Custodial service cost $7,125 $31,350 $18,525 Maintenance cost $9,000 $18,000 $18,000 Total costs after allocation $57,000 $45,000 $1,69,125 $1,57,350 $17,16,525Related Questions
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