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

Question

The Sendai Co, Ltd., of Japan has budgeted costs in its various departments as follows for the coming Factory Administration Custodial Services Personnel Maintenance Machining overhead Assembly -overhead 985,325 142,911 61,544 65,540 919272 867 258 Total coat $3,041.850 The company allocates service depertment costs to other departments in the order listed below Feet of Direct Space Labor Machine 14,500 Total Number of Labor Space Labor- Machine- Emplayees Hours Occupied Hours Hours Ds eparment Factory Administration Custodial Service Personnel Maintonance Machining Assembly 8.100 8,600 17,800 52,600 19,400 120,00075,00040,000 161 250 160,00026,000 232,00053,750 17 4,800 144 350 358,300 147,300 272,000215,000 Machining and Assembly are operating departments the other departments are service departments. Factory Administrstion is alocated on the basis of labar-hours: Custocial Serices on the bass of squsre feet occupied: Personnel on the basis romber or employees, and Maintenance on the basis cf mache. hours

Explanation / Answer

1.

Factory administration

Custodial services

Personnel

Maintenance

Machining

Assembly

Operating costs

$919,272.00

$867,258.00

Costs to be allocated

$985,325.00

$142,911.00

$61,544.00

$65,540.00

Allocation:

Factory administration

-$985,325.00

$22,275.00

$48,400.00

$144,650.00

$330,000.00

$440,000.00

Custodial services

-$165,186.00

$6,384.00

$25,802.00

$99,750.00

$33,250.00

Personnel

-$116,328.00

$22,008.00

$37,728.00

$56,592.00

Maintenance

-$258,000.00

$193,500.00

$64,500.00

$0.00

$0.00

$0.00

$0.00

$15,80,250.00

$14,61,600.00

Calculation of allocation rate:

Factory administration

Cost to be allocated / Direct labor hours

$985,325 / 358,300

$2.75 per direct labor hour

Custodial services

Cost to be allocated / Sqaure feet

$165,186 / (147300 - 14500 - 8600)

$1.33 per square feet occupied

Personnel

Cost to be allocated / No. of employees

$116,328 / (56+ 96 +144)

$393 per employee

Maintenance

Cost to be allocated / Machine hours

$258,000/(161250+53750)

$1.20 per machine hour

2.

Predetermined overhead rate for machining department = $15,80,250 / Machine hours = $1,580,250/161,250 = $9.80 per machine hour

Predetermined overhead rate for assembly department = $1,461,600 / Direct Labor hours = $1,461,600/232,000 = $6.30 per direct labor hour

Factory administration

Custodial services

Personnel

Maintenance

Machining

Assembly

Operating costs

$919,272.00

$867,258.00

Costs to be allocated

$985,325.00

$142,911.00

$61,544.00

$65,540.00

Allocation:

Factory administration

-$985,325.00

$22,275.00

$48,400.00

$144,650.00

$330,000.00

$440,000.00

Custodial services

-$165,186.00

$6,384.00

$25,802.00

$99,750.00

$33,250.00

Personnel

-$116,328.00

$22,008.00

$37,728.00

$56,592.00

Maintenance

-$258,000.00

$193,500.00

$64,500.00

$0.00

$0.00

$0.00

$0.00

$15,80,250.00

$14,61,600.00

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