Managerial accounting

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Ch.4 Process Board

Chapter 4
Process Costing HSO TOY COMPANY
Data Set:
RawMaterial DirectLabor Mfg.OverHead Total
Beginning Inventory $10,000 $1,060 $1,620 $12,680
Units 10,000 10,000 10,000 10,000
% complete 100% 30% 40%
Equivalent units 10,000 3,000 4,000
Units started in period 40,000 40,000 40,000 40,000
Units completed in period 44,000 44,000 44,000 44,000
Cost incurred in period $44,000 $22,440 $43,600 $110,040
Units to be accounted for = Beg + started 50,000 50,000 50,000 50,000
Ending Inventory 6,000 6,000 6,000 6,000
% complete 100% 50% 60%
Equivalent units 6,000 3,000 3,600
A. Ending Inventory Value using Weighted Average
Use Beginning Inventory + Period costs
RM DL MOH Total
Beginning Inventory $10,000 $1,060 $1,620 $12,680
Cost incurred in period $44,000 $22,440 $43,600 $110,040
Beginning + Period $s = Ending Inventory $s $54,000 $23,500 $45,220 $122,720
Completed units @ 100% 44,000 44,000 44,000
Ending Inventory Equivalent units 6,000 3,000 3,600
Total Beg. + Period equivalent units 50,000 47,000 47,600
Cost per Equivalent unit $1.08 $0.50 $0.95 $2.53
for units to next area
Ending Equivalent units 6,000 3,000 3,600
Ending inventory value $6,480 $1,500 $3,420 $11,400
A. Ending Inventory Value using FIFO
Use Beginning Inventory + Period costs
RM DL MOH Total
Beginning inventory Units 10,000 10,000 10,000
Beginning inventory: Equivalent units 10,000 3,000 4,000
Period work to complete Beginning units 0% 70% 60%
Period equivalent units production
to complete beginning inventory 0 7,000 6,000
Units started 40,000 40,000 40,000
Units completed 44,000 44,000 44,000
Completed & started in period [less beginning] 34,000 34,000 34,000
= equivalent units for period completed 34,000 34,000 34,000
Ending Inventory 6,000 6,000 6,000
% complete 100% 50% 60%
Equivalent Enduing units 6,000 3,000 3,600
Work done in Period in Equivalent units
Beginning 0 7,000 6,000
Started & completed in period 34,000 34,000 34,000
Ending Equivalent units 6,000 3,000 3,600
Total Equivalent work in period 40,000 44,000 43,600
Cost incurred in period $44,000 $22,440 $43,600 $110,040
FIFO cost per equivalent unit $1.10 $0.51 $1.00 $2.61
Ending Inventory value [ Eq. Units x cost/ea.] $6,600 $1,530 $3,600 $11,730

Ch. 4 slides 40-50

Ch.4 Process cost
Weighted Average Inventory Valuation Method (FIFO Average) Same if total overhead Weighted average Assembly Department
Department: SMD Materials Materials Materials Materials Conversion = DL + Variable Overhead Total $ Cost Reconciliation / Weighted Average Method
Units $ % complete Equiv. Units Units $ % complete Equiv. Units Costs to be accounted for:
Qty $ % Eq. Qty Qty $ % Eq. Qty Cost of beginning Work in Process Inventory $15,175
Beginning 200 200 $9,600 55% 110 200 $5,575 30% 60 $ 15,175 Costs added to production during the period $729,500
Total cost to be accounted for $744,675
Started 5000 5000 $378,600 5000 $350,900 added in period $ 729,500 Total costs to be accounted $744,675
solve Completed 4800 4800 100% 4800 4800 100% 4800
10000
Ending -400 400 40% 160 400 25% 100
Cost accounted for as follows:
Equivalent Production $388,200 4960 $356,475 4900 200 $356,475 Cost of units transferred out $ 724,877
Ending WIP Inventory $19,798
Total $ for Wghtd. Avgr. inventory valuation $378,200 $356,475 $ 734,675 200 Cost of ending Work in Process Inventory $19,798
Per unit $78.27 $72.75 $ 744,675 5000 4900 Ending WIP Inventory $ 19,798
5200 72.75 Total cost accounted for $ 744,675
To next department 4800 $375,677 100% 4800 4800 $349,200 100% 4800 $ 724,877
Ending WIP for SMD 400 $12,523 40% 160 400 $7,275 25% 100 $ 19,798 4800 $72.75
$388,200 4960 $356,475 4900 $ 744,675 400 100 End
0.00 5200 $7,275 End Inv. $
FIFO: Appendix A Same if total overhead
Department: SMD Materials Conversion = DL + Variable Overhead Total $ F I F O
Units $ % complete Equiv. Units Units $ % complete Equiv. Units
M
Beginning 200 $9,600 55% 110 200 $5,575 30% 60 $ 15,175 90
Completion of beginning units 45% 90 to complete beginning 70% 140 4600
160
Started 5000 $378,600 5000 $350,900 $ 719,500 4850
Completed 4800 100% 4800 100% 4800 LOH
140 to finish beginning
Started & completed this period 4600 100% 4600 4600 100% 4600 4600 start & complete
100 End Eq. Qty
Ending 400 40% 160 400 25% 100 4840
Equivalent Production $378,600 4850 Work done in the period only 4840
Total $ for FIFO $378,600 $350,900 $ 719,500 $350,900
Per unit $78.06 $72.50 $ 150.56 4840
72.50 100
To next department 4800 $376,040 100% 4800 4800 $349,225 100% 4800 $ 725,265 $ 7,250
Ending WIP for SMD 400 $12,160 40% 160 400 $7,250 25% 100 $ 19,410
$378,200 4960 $356,475 4900 $ 744,675
Ending Inventory Qty $ % compl. Eq. Qty Qty $ % compl. Eq. Qty Total
Weighted Average 400 $12,523 40% 160 400 $7,275 0.25 100 $19,798
FiFO 400 $12,160 40% 160 400 $7,250 0.25 100 $19,410
difference 0 $ 362.58 0 0 0 $ 25.00 0 0 $ 387.58
Per unit $0.20 $0.25
$78.27 $72.75
$78.06 $72.50
$0.20 $0.25
Separate File tab "Cost Allocaton"
Maintenance
$600,000
37.50% Machining $225,000
62.50% Assembly $375,000 +
IT
$116,000
88.9% Machining $103,111
11.1% Assembly $12,889
600000
Reciprocal Method
Function A: with reciprocal allocation of OH Function A = Maintenance
Function B = IT
Function A with reciprocal allocation =
Function A Spending + (Function A % usage of Function B X Function B Spending)
Maintenance = $600000 + (10% X IT)
IT = $116000 + (20% X Maintenance)
Maintenance = $600000 + 10% X ($116000 + (20% X Maintainance))
$600000 + 10% X $116000 + 10% X (20% X Maintenance)
$600000 + $116000 + 2% X Maintanance
98% Maintenance = $600000 + $11600
98% Maintenance = $600000 + $11600
98% Maintenance = $611,600
ah 100% Maintenance = $ 624,082
IT = $116000 +20%*PM
IT = $116000 +20%*$624082 Reciprocal Budget Allocated
ai IT = $116000 + $124816 $ 624,082 $ - 0 - 0
IT = $ 240,816 $ 240,816 $ - 0 - 0
$ 864,898 $ - 0 - 0
Machining +
Assembly
PM IT 0 0 0
$ 624,082 - 0 - 0 - 0 ah X ad
240,816 - 0 - 0 - 0 ai X af
Functional FOH→ - 0 - 0 - 0 ab
$ - 0 $ - 0 $ - 0

80%

90%

Ch.4 Cost Alloc

ACC302
Chapter 15 ACC302 /// Chapter 4 ACC220
Allocation of Costs
HC Tamburro
Single & Dual Rate Methods:
Data Set: #1
Amount From To
a Relevant Range hours 11,000 13,500
b Master Budget Fixed Manufacturing Costs $ 3,000,000
c Practical Capacity 18,750 Hours
d Master Budget 2xx1: Peripherals 8,000 hours
e Master Budget 2xx1: Microcomputers 4,000 hours
f Total Budgeted Hours 12,000 hours
g Master Budget Variable OH $ 200.00 hour
h Actual 2xx1: Peripherals 9,000
i Actual 2xx1: Microcomputers 3,000
j Total Actual Hours 12,000
Single Rate/Single Pool
k Total Variable OH Budget $ 2,400,000 g*f
Master Budget Fixed Manufacturing Costs $ 3,000,000 +b
l Total Overhead Pool $ 5,400,000 + k + i
Rate per Hour
m Microcomputers $ 450.00 + l / f
n peripherals $ 450.00 + l / f
Dual Rate/Single Pool
b Master Budget Fixed Manufacturing Costs $ 3,000,000
f Total Budgeted Hours 12,000
p Fixed OH Rate $ 250.00 + b / f
g Master Budget Variable OH $ 200.00
q Combined Fixed & Variable $ 450.00 + p + g
Data Set: #2
Assuming actual = Budget for variable OH rates
Review Fixed OH only
Isolation of change in hours only
Actual hours
Case 1 2 3
r Microcomputers 8,000 8,000 8,000
s Peripherals 4,000 7,000 2,000
t Totals: 12,000 15,000 10,000
Master Budget Fixed Manufacturing Costs $ 3,000,000 $ 3,000,000 $ 3,000,000 b
Actual Hours @ Total Budget OH
u Microcomputers $ 2,000,000 $ 1,600,000 $ 2,400,000 + (r / t) * b
v Peripherals $ 1,000,000 $ 1,400,000 $ 600,000 + (s / t) * b
b Total: $ 3,000,000 $ 3,000,000 $ 3,000,000 + u + v
Rate per hour Actual Hours @ Total Budget OH
w Microcomputers $ 250.00 $ 200.00 $ 300.00 + u / r
x Peripherals $ 250.00 $ 200.00 $ 300.00 + v / s
z Diff: Master Budg. Single Rate
aa Microcomputers $ - 0 $ 50.00 $ (50.00)
Peripherals $ - 0 $ 50.00 $ (50.00)
ACC 220 Start here data references from #3 Maintenance IT
Data Set: #3 Production Only 2,400 1600 88.9%
Support Departments Operating Departments 4,000 2,400 37.5% 200 11.1%
Maintenance IT Support Machining Assembly Total: 6,400 4,000 62.5% 1800
ab Functional Spending $s $ 600,000 $ 116,000 $ 400,000 $ 200,000 $ 1,316,000
ac Units: Hours 1,600 2,400 4,000 8,000 Production Hrs.
ad % 20.0% 30.0% 50.0% 100.0%
Without support functions 0.0% 37.5% 62.5% $ 600,000 225000 37.5% Maintenance
$ 116,000 103111 88.9% IT Support
ae Computer Hours 200 1600 200 2,000 328111
af % 10.0% 80.0% 10.0% 100.0%
Without support functions 88.9% 11.1% $ 600,000 $ 375,000 62.5%
without service to service $ 116,000 $ 12,889 11.1%
Data Set: #4 387889
Direct Method of Overhead Allocation
Allocate from Support direct to operating
ag Total Operating depts. Hours 6,400 ac operating depts.
ah support cost-rate per hour Maintenance $ 93.75 + 'ab' Maint. / 'ac' opera. hours
ai support cost-rate per hour Assembly 64.44 + 'ab' IT. / 'ac' opera. hours
Maintenance IT Support
Allocated support costs Maintenance IT Support $ 600,000 $ 600,000 $ 116,000 $ 116,000
aj Machining 225,000 103,111 + ac opera * ah , ai 37.5% 62.5% 88.9% 11.1%
ak Assembly 375,000 12,889 + ac mach * ah , ai $ 225,000 $ 375,000 $ 103,111 $ 12,889
al Total 600,000 116,000 Machining Assembly Machining Assembly
Direct Fixed OH costs Direct Allocated Total Rate Maintenance IT Support SUM
az +ab + aj Machining 400,000 328,111 728,111 $ 303.38 225,000 103,111 328,111
ax +ab + ak Assembly 200,000 387,889 587,889 $ 146.97 375,000 12,889 387,889
aw + az + ax Total 600,000 716,000 1,316,000
Step Down Method of Overhead Allocation allocate service to service // set hierarchy
Maintenance is deemed Step 1 or higher in hierarchy for allocation
Support Departments Operating Departments
Maintenance IT Support Machining Assembly Total:
ac Hours work done by maint. 1,600 2,400 4,000 8,000
ad % 20.0% 30.0% 50.0% 100.0% $ 600,000 Maintenance
$ (120,000) to IT 20.0%
ae IT base = Computer Hours 200 1600 200 2,000 $ 480,000 M to Prodn
af % 10.0% 80.0% 10.0% 100.0%
Funtion spending above
ab Functional Spending $s $ 600,000 $ 116,000 $ 400,000 $ 200,000 $ 1,316,000 $ 600,000 30.0% Machining $ 180,000
Maint to prodn. $ 600,000 50.0% Assembly $ 300,000
ac From Maint. To all Functions $ 120,000 $ 180,000 $ 300,000 $ 600,000 + ab Maint. ad %
ad Subtotal: $ 236,000 $ 580,000 $ 500,000 $ 1,316,000
ae Operating % of IT 88.9% 11.1% 100.0% af w/out Maint.% $ 236,000 $ 236,000
af From IT to Opera. Depts. $ 209,778 $ 26,222 $ 236,000 + af * ad IT Prod. Only % 88.9% 11.1%
From IT after alloc from M $ 209,778 $ 26,222
ag Total: $ 789,778 $ 526,222 $ 1,316,000 + af + ag Machining Assembly
80%/90% 10%/90%
Reciprocal Method
Function A: with reciprocal allocation of OH Function A = Maintenance
Function B = IT
Function A with reciprocal allocation =
Function A Spending + (Function A % usage of Function B X Function B Spending)
Maintenance = $600000 + (10% X IT)
IT = $116000 + (20% X Maintenance) IT = ($116000 + (20% X Maintainance))
Maintenance = $600000 + 10% X ($116000 + (20% X Maintainance))
$600000 + 10% X $116000 + 10% X (20% X Maintenance)
$600000 + $116000 + 2% X Maintanance
98% Maintenance = $600000 + $11600
98% Maintenance = $600000 + $11600
98% Maintenance = $611,600
ah 100% Maintenance = $ 624,082
IT = $116000 +20%*PM
IT = $116000 +20%*$624082 Reciprocal Budget Allocated
ai IT = $116000 + $124816 $ 624,082 $ 600,000 499,265
IT = $ 240,816 $ 240,816 $ 116,000 216,734
$ 864,898 $ 716,000 716,000
Machining +
Assembly
PM IT Machining Assembly Total:
$ 624,082 187,224 312,041 499,265 ah X ad
240,816 192,653 24,082 216,734 ai X af
Functional FOH→ 400,000 200,000 600,000 ab
$ 779,877 $ 536,122 $ 1,316,000
Comparison of Methods Machining +
Assembly
Machining Assembly Total:
Direct Method of Overhead Allocation 728,111 587,889 1,316,000
Step Down Method of Overhead Allocation 789,778 526,222 1,316,000
Reciprocal Method 779,877 536,122 1,316,000
Incremental Cost Allocation
Identify primary use
Identify secondary use
Aloocate primary amount of cost to primary use
Allocate incrment over primary to secondary
Value @ cost Tons
Extract Aluminum fro Ore 12,000,000 24,000,000
Gold is extracted as well 1,200,000 0.0536
Total cost to extract 6,100,000
Withuot extracting Gold 6,000,000
Incremental cost assigned to gold 100,000

80%

90%

Ch. Process Cost #1

ACC302
Chapter 15 ACC302 /// Chapter 4 ACC220
Allocation of Costs
HC Tamburro
Single & Dual Rate Methods:
Data Set: #1
Amount From To
a Relevant Range hours 11,000 13,500
b Master Budget Fixed Manufacturing Costs $ 3,000,000
c Practical Capacity 18,750 Hours
d Master Budget 2xx1: Peripherals 8,000 hours
e Master Budget 2xx1: Microcomputers 4,000 hours
f Total Budgeted Hours 12,000 hours
g Master Budget Variable OH $ 200.00 hour
h Actual 2xx1: Peripherals 9,000
i Actual 2xx1: Microcomputers 3,000
j Total Actual Hours 12,000
Single Rate/Single Pool
k Total Variable OH Budget $ 2,400,000 g*f
Master Budget Fixed Manufacturing Costs $ 3,000,000 +b
l Total Overhead Pool $ 5,400,000 + k + i
Rate per Hour
m Microcomputers $ 450.00 + l / f
n peripherals $ 450.00 + l / f
Dual Rate/Single Pool
b Master Budget Fixed Manufacturing Costs $ 3,000,000
f Total Budgeted Hours 12,000
p Fixed OH Rate $ 250.00 + b / f
g Master Budget Variable OH $ 200.00
q Combined Fixed & Variable $ 450.00 + p + g
Data Set: #2
Assuming actual = Budget for variable OH rates
Review Fixed OH only
Isolation of change in hours only
Actual hours
Case 1 2 3
r Microcomputers 8,000 8,000 8,000
s Peripherals 4,000 7,000 2,000
t Totals: 12,000 15,000 10,000
Master Budget Fixed Manufacturing Costs $ 3,000,000 $ 3,000,000 $ 3,000,000 b
Actual Hours @ Total Budget OH
u Microcomputers $ 2,000,000 $ 1,600,000 $ 2,400,000 + (r / t) * b
v Peripherals $ 1,000,000 $ 1,400,000 $ 600,000 + (s / t) * b
b Total: $ 3,000,000 $ 3,000,000 $ 3,000,000 + u + v
Rate per hour Actual Hours @ Total Budget OH
w Microcomputers $ 250.00 $ 200.00 $ 300.00 + u / r
x Peripherals $ 250.00 $ 200.00 $ 300.00 + v / s
z Diff: Master Budg. Single Rate
aa Microcomputers $ - 0 $ 50.00 $ (50.00)
Peripherals $ - 0 $ 50.00 $ (50.00)
ACC 220 Start here data references from #3 Maintenance IT
Data Set: #3 Production Only 2,400 1600 88.9%
Support Departments Operating Departments 4,000 2,400 37.5% 200 11.1%
Maintenance IT Support Machining Assembly Total: 6,400 4,000 62.5% 1800
ab Functional Spending $s $ 600,000 $ 116,000 $ 400,000 $ 200,000 $ 1,316,000
ac Units: Hours 1,600 2,400 4,000 8,000 Production Hrs.
ad % 20.0% 30.0% 50.0% 100.0%
Without support functions 0.0% 37.5% 62.5% $ 600,000 225000 37.5% Maintenance
$ 116,000 103111 88.9% IT Support
ae Computer Hours 200 1600 200 2,000 328111
af % 10.0% 80.0% 10.0% 100.0%
Without support functions 88.9% 11.1% $ 600,000 $ 375,000 62.5%
without service to service $ 116,000 $ 12,889 11.1%
Data Set: #4 387889
Direct Method of Overhead Allocation
Allocate from Support direct to operating
ag Total Operating depts. Hours 6,400 ac operating depts.
ah support cost-rate per hour Maintenance $ 93.75 + 'ab' Maint. / 'ac' opera. hours
ai support cost-rate per hour Assembly 64.44 + 'ab' IT. / 'ac' opera. hours
Maintenance IT Support
Allocated support costs Maintenance IT Support $ 600,000 $ 600,000 $ 116,000 $ 116,000
aj Machining 225,000 103,111 + ac opera * ah , ai 37.5% 62.5% 88.9% 11.1%
ak Assembly 375,000 12,889 + ac mach * ah , ai $ 225,000 $ 375,000 $ 103,111 $ 12,889
al Total 600,000 116,000 Machining Assembly Machining Assembly
Direct Fixed OH costs Direct Allocated Total Rate Maintenance IT Support SUM
az +ab + aj Machining 400,000 328,111 728,111 $ 303.38 225,000 103,111 328,111
ax +ab + ak Assembly 200,000 387,889 587,889 $ 146.97 375,000 12,889 387,889
aw + az + ax Total 600,000 716,000 1,316,000
Step Down Method of Overhead Allocation allocate service to service // set hierarchy
Maintenance is deemed Step 1 or higher in hierarchy for allocation
Support Departments Operating Departments
Maintenance IT Support Machining Assembly Total:
ac Hours work done by maint. 1,600 2,400 4,000 8,000
ad % 20.0% 30.0% 50.0% 100.0% $ 600,000 Maintenance
$ (120,000) to IT 20.0%
ae IT base = Computer Hours 200 1600 200 2,000 $ 480,000 M to Prodn
af % 10.0% 80.0% 10.0% 100.0%
Funtion spending above
ab Functional Spending $s $ 600,000 $ 116,000 $ 400,000 $ 200,000 $ 1,316,000 $ 600,000 30.0% Machining $ 180,000
Maint to prodn. $ 600,000 50.0% Assembly $ 300,000
ac From Maint. To all Functions $ 120,000 $ 180,000 $ 300,000 $ 600,000 + ab Maint. ad %
ad Subtotal: $ 236,000 $ 580,000 $ 500,000 $ 1,316,000
ae Operating % of IT 88.9% 11.1% 100.0% af w/out Maint.% $ 236,000 $ 236,000
af From IT to Opera. Depts. $ 209,778 $ 26,222 $ 236,000 + af * ad IT Prod. Only % 88.9% 11.1%
From IT after alloc from M $ 209,778 $ 26,222
ag Total: $ 789,778 $ 526,222 $ 1,316,000 + af + ag Machining Assembly
80%/90% 10%/90%
Reciprocal Method
Function A: with reciprocal allocation of OH Function A = Maintenance
Function B = IT
Function A with reciprocal allocation =
Function A Spending + (Function A % usage of Function B X Function B Spending)
Maintenance = $600000 + (10% X IT)
IT = $116000 + (20% X Maintenance) IT = ($116000 + (20% X Maintainance))
Maintenance = $600000 + 10% X ($116000 + (20% X Maintainance))
$600000 + 10% X $116000 + 10% X (20% X Maintenance)
$600000 + $116000 + 2% X Maintanance
98% Maintenance = $600000 + $11600
98% Maintenance = $600000 + $11600
98% Maintenance = $611,600
ah 100% Maintenance = $ 624,082
IT = $116000 +20%*PM
IT = $116000 +20%*$624082 Reciprocal Budget Allocated
ai IT = $116000 + $124816 $ 624,082 $ 600,000 499,265
IT = $ 240,816 $ 240,816 $ 116,000 216,734
$ 864,898 $ 716,000 716,000
Machining +
Assembly
PM IT Machining Assembly Total:
$ 624,082 187,224 312,041 499,265 ah X ad
240,816 192,653 24,082 216,734 ai X af
Functional FOH→ 400,000 200,000 600,000 ab
$ 779,877 $ 536,122 $ 1,316,000
Comparison of Methods Machining +
Assembly
Machining Assembly Total:
Direct Method of Overhead Allocation 728,111 587,889 1,316,000
Step Down Method of Overhead Allocation 789,778 526,222 1,316,000
Reciprocal Method 779,877 536,122 1,316,000
Incremental Cost Allocation
Identify primary use
Identify secondary use
Aloocate primary amount of cost to primary use
Allocate incrment over primary to secondary
Value @ cost Tons
Extract Aluminum fro Ore 12,000,000 24,000,000
Gold is extracted as well 1,200,000 0.0536
Total cost to extract 6,100,000
Withuot extracting Gold 6,000,000
Incremental cost assigned to gold 100,000

80%

90%

Ch. 4 HW

Ch. 4
Process costing
Homework
Conversion costs only
Completed units going from Dept. W. to Finished Goods [FG]
Department W:
Data: 1 $ 5,600.00 Beginning inventory $'s
2 60% % complete of beginning inventory quantity
3 400 Beginning inventory quantity
4 $ 14,000.00 Period conversion spending
5 3,000 quantity started in period
6 500 Ending quantity
7 70% % complete of ending inventory quantity
To do: A Compute weighted average beginning equivalent units, ending equivalent units, started & completed equivalent units & cost per unit
B Compute weighted average ending conversion $s @ department W
C Compute conversion $s to FG with weighted average
D Prepare JE for Weighted average at period end
E Compute FIFO beginning equivalent units, ending equivalent units, equivalent units started & completed, equivalent units for period & cost per unit
G Compute FIFO ending conversion $s @ department W
H Compute conversion $s to FG with FIFO
I Prepare JE for FIFO at period end

Conversion Costs Transferred OUT:

Weighted Average:

Beginnig Costs

5,575

Period Costs

350,900

Total

356,475

Equivalent units

4,900

per Equivalent Unit

72.75

$

Completed: To next Department or FG

4,800

349,200

Ending in Department

400 = 100 Eq.units

7,275

356,475

Data Set:

#3

Support DepartmentsOperating Departments

MaintenanceIT SupportMachiningAssemblyTotal:

abFunctional Spending $s600,000$ 116,000$ 400,000$ 200,000$ 1,316,000$

acUnits: Hours1,600 2,400 4,000 8,000

ad%20.0%30.0%50.0%100.0%

Without support functions37.5%62.5%

aeComputer Hours20016002002,000

af%10.0%80.0%10.0%100.0%

Without support functions88.9%11.1%

Data Set:

#4

Direct Method of Overhead Allocation

Allocate from Support direct to operating

agTotal Operating depts. Hours6,400 ac operating depts.

ahsupport cost-rate per hour

Maintenance

93.75$ + 'ab' Maint. / 'ac' opera. hours

aisupport cost-rate per hourAssembly64.44 + 'ab' IT. / 'ac' opera. hours

Allocated support costs

Maintenance

IT Support

ajMachining225,000 103,111 + ac opera * ah , ai

akAssembly375,000 12,889 + ac mach * ah , ai

alTotal600,000 116,000

Direct Fixed OH costs

Direct

AllocatedTotalRate

az+ab + ajMachining400,000 328,111 728,111 303.38$

ax+ab + akAssembly200,000 387,889 587,889 146.97$

aw+ az + axTotal600,000 716,000 1,316,000