e none of the ahove 38. The following intommation pertains to Victor Compan Prod
ID: 2596393 • Letter: E
Question
e none of the ahove 38. The following intommation pertains to Victor Compan Produsing epartment Personnel Maintenance Budgeted overhead $30000 $144,000 Direct labor hours Machine hours Number of employces $280,000 $320,000 16,000 20,000 24,000 16,000 4,000 5,000 Victor C ompany does not divide costs into fixed and variable components ersonnel costs are allocated on mach b aire allocated bused on the namber of employees. nd maintenanee costs assembly are based on direct ine hours. Predetermined overhead rates for fabrication and labor hours, (Round amounts to dollars.) The amoant of cost allocated to the Assembly Department using tbe direct method is a. $57,600 b. $96,000 c· $28.800 d. $76,320 e none of the above 9, How much personnel cost will be allocated to Fabrication if the Direct Method is used in the Victor Company Case above? a. $24,490 b. $30,000 c $48,000 d. neither is cormect 40. If the sequential (step-down) method starting with Personnel is used in Victor Company Case above then the personnel cost allocated to the Fabrication Department will be a. S 4,800 b. $16,000 c. $25,600 d $38,400 e. neither is correctExplanation / Answer
1. Maintenance cost is allocated to the fabrication & Assembly deprartment on the basis of machine hours.
Maintenance cost per machine hours = Total Cost / Total Machine hours
= 144,000 / (24,000 + 16,000) = $3.6 per hours
Total Assembly department machine hours = 16,000
Total Allocated cost to assembly = $3.6 x 16,000 = $57,600
Correct Answer is A.
2. Personnel cost is allocated on the basis of number of employees in producing department
Personnel Cost per employee = 80,000 / 80 = $1,000 per personnel
Total Allocated cost to Fabrication = $1,000 x 30 = $30,000
Correct Answer is B.
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