The Sendai Co, Ltd, of Japan has budgeted costs in its various departments as fo

Question

The Sendai Co, Ltd, of Japan has budgeted costs in its various departments as follows for the coming year Factory Administration Custodial Services Personnel Maintenance Machining-overhead Assembly-overhead Total cost 350,7ee 122,425 56,830 116,045 1,210,800 1,874, 2ee $2,931,ee0 Book Print erences The company allocates service depertment costs to other departments in the order listed below. Square Total Feet of Direct Number of Labor-Space Labor Machine- Employees Hours Occupied Houns Hours Department ,600 Factory Administration Custodial Services Personnel Maintenance Machining Assembly 26 1917,6007,0 $2 8040,000 70,000 45,000 150,000 9,300,000 46,900 12,100 120,000 20,000 231,000 60,000 120 Activate Win 310 33 800 325,500 276.000 210.000

Explanation / Answer

Answer 1. Service Department Cost Allocation Statement Under Step Down Method. Service Operating Factory Administration Custodial Services Personnel Maintenance Machining Assembly Operating Department Costs       1,210,800.00       1,074,200.00 Costs to be allocated          350,700.00          122,425.00             56,830.00          116,045.00 Allocation: Factory Administration        (350,700.00)             13,950.00             26,400.00             70,350.00             60,000.00          180,000.00 Custodial Services        (136,375.00)               8,750.00             15,125.00             87,500.00             25,000.00 Personnel          (91,980.00)             18,980.00             29,200.00             43,800.00 Maintenance        (220,500.00)          157,500.00             63,000.00 Total Overhead after Allocation                            -                              -                              -                              -         1,545,000.00       1,386,000.00 Predetermined Overhead Rate                     10.30                       6.00 Allocation of Factory Administration Allocation Rate (Labor Hours) Weighted Base Allocated Cost Custodial Services               9,300.00 3.98%             13,950.00 Personnel             17,600.00 7.53%             26,400.00 Maintenance             46,900.00 20.06%             70,350.00 Machining             40,000.00 17.11%             60,000.00 Assembly          120,000.00 51.33%          180,000.00 Total          233,800.00 100.00%          350,700.00 Allocation of Custodial Services Allocation Rate (sq. feet occupied) Weighted Base Allocated Cost Personnel               7,000.00 6.42%               8,750.00 Maintenance             12,100.00 11.09%             15,125.00 Machining             70,000.00 64.16%             87,500.00 Assembly             20,000.00 18.33%             25,000.00 Total          109,100.00 100.00%          136,375.00 Allocation of Personnel Allocation Rate (no. of employees) Weighted Base Allocated Cost Maintenance                     52.00 20.63%             18,980.00 Machining                     80.00 31.75%             29,200.00 Assembly                   120.00 47.62%             43,800.00 Total                   252.00 100.00%             91,980.00 Allocation of Maintenance Allocation Rate (Machine Hrs) Weighted Base Allocated Cost Machining          150,000.00 71.43%          157,500.00 Assembly             60,000.00 28.57%             63,000.00 Total          210,000.00 100.00%          220,500.00 Answer 2. Service Department Cost Allocation Statement Under Direct Method. Service Operating Factory Administration Custodial Services Personnel Maintenance Machining Assembly Operating Department Costs       1,210,800.00       1,074,200.00 Costs to be allocated                350,700                122,425                   56,830                116,045 Allocation: Factory Administration              (350,700)                   87,675                263,025 Custodial Services              (122,425)                   95,219                   27,206 Personnel                (56,830)                   22,732                   34,098 Maintenance              (116,045)                   82,889                   33,156 Total Overhead after Allocation                            -                              -                              -                              -               1,499,316             1,431,684 Predetermined Overhead Rate                       9.14                       6.85 Allocation of Factory Administration Allocation Rate (Labor Hours) Weighted Base Allocated Cost Machining             40,000.00 25.00%             87,675.00 Assembly          120,000.00 75.00%          263,025.00 Total          160,000.00 100.00%          350,700.00 Allocation of Custodial Services Allocation Rate (sq. feet occupied) Weighted Base Allocated Cost Machining             70,000.00 77.78%             95,219.44 Assembly             20,000.00 22.22%             27,205.56 Total             90,000.00 100.00%          122,425.00 Allocation of Personnel Allocation Rate (no. of employees) Weighted Base Allocated Cost Machining                     80.00 40.00%             22,732.00 Assembly                   120.00 60.00%             34,098.00 Total                   200.00 100.00%             56,830.00 Allocation of Maintenance Allocation Rate (Machine Hrs) Weighted Base Allocated Cost Machining          150,000.00 71.43%             82,889.29 Assembly             60,000.00 28.57%             33,155.71 Total          210,000.00 100.00%          116,045.00 Answer 3. Plantwide Overhead Rate = $2,931,000 (Total Overhead) / 276,000 DLH Plantwide Overhead Rate = $10.62 per DLH Answer 4. Machining Assembly Total Overhead Machine Hrs                         270                           34 Direct Labor Hours                           14                           82 Step Down Method                     2,781                         492                     3,273 Direct Method                     2,468                         562                     3,030 Plantwide Method                         149                         871                     1,019

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