cost Accounting 2

  

Question: 1- (3 points)

If you have these 2 constraints:

0.6R+4D £ 180,000 Machine Hour constraint

3R+5D £ 150,000 Direct Labor Hour constraint

Required:

a Draw a graph showing the possible production plans for this company. 

b- From your opinion where is the feasible area of the production plan. Explain your answer.

Answer: 

Question no 2 

A housekeeping support department budgets its costs at SR 40,000 per month plus SR 12 / hour. For January the following were the estimated and actual hours provided by the housekeeping support department to 3 operating department.

  

Estimated hours spent   cleaning 

Actual hours spent cleaning 

 

Department A

1600

1500

 

Department B

1400

1600

 

Department C

2000

1800

 

Total 

5000

4900

Required:

A- What is the support department's allocation rate if estimated activity is the allocation base?

B  What is the support department's allocation rate if actual activity is the allocation base?

C List one advantages and one disadvantage for each types of allocation rate. (3 points)

3- Al Yamamah Steel Industries Co. uses the step method for allocating the costs of its service departments to operating departments. The company has two support departments (Human Resource and Information Technology) and two operating departments (Hot Rolled Hollow Steel and Cold Rolled Hollow Steel).

Al Yamamah Steel Industries Co. decided to allocate Human Resource department costs based on the number of employees in each department and Information Technology costs based on the number of machine hours in each department.   (4 Points).

Required: 

a- Give a numerical example for the four departments as a given information. 

  

Support Departments

Operating Departments

TOTAL

 

Human Resource

Information Technology

Hot Rolled Hollow Steel 

cold Rolled Hollow Steel

 

Total department cost

 

Number of employees

 

Number of machine hours

b- Then based on your given information, use the step-down method to allocate support department costs.

Allocate cost:

  

Human Resource

 

Information Technology

 

 

TOTAL

Answers will be varied among students