Service Department Cost Allocation Presented below are certain operating data fo
ID: 2523079 • Letter: S
Question
Service Department Cost Allocation Presented below are certain operating data for the four departments of Tally Manufacturing Company. Service Production Total manufacturing overhead costs either id Square feet of factory floor space entifiable with or allocated to each department 20,000 $144,000 $180,000 $196,000 80,000 160,000 20 40,000 60,000 $1 Number of factory workers Planned direct labor hours for the year 60 Allocate, to the two production departments, the costs of service departments 1 and 2, using factory floor space and number of workers respectively, as bases. Do not round bases when calculating reallocations of service departments. Production dentifiable and allocated overhead s Reallocation of service departments: Dept. 1 Factory floor space Dept. 2 Number of factory workers Total manufacturing overhead $ rquiz/attempt.php?attempt. 1 776081 &page-6;#Explanation / Answer
Product 1
Product 2
identifiable and allocated overhead
180000
196000
reallocation of Service department
dept 1 factory floor space
factory floor rate per square feet = 120000/240000 = .5 For production department 1 = 80000*.5 For production department -2 .5*160000
40000
80000
dept -2 number of factory workers
overhead rate per factory worker = 144000/80 =1800 For production no 1 = 1800*60 for product -2 1800*20
108000
36000
total manufacturing overhead
328000
312000
Product 1
Product 2
identifiable and allocated overhead
180000
196000
reallocation of Service department
Department 1- direct labor hours
For product 1- 1.20*40000 =48000 for product- 2 1.2*60000 = 72000
48000
72000
department 2- direct labor hours
57600
86400
total manufacturing overhead
285600
354400
overhead rate per Labor hour
120000/100000
1.2
Product 1
Product 2
identifiable and allocated overhead
180000
196000
reallocation of Service department
dept 1 factory floor space
factory floor rate per square feet = 120000/240000 = .5 For production department 1 = 80000*.5 For production department -2 .5*160000
40000
80000
dept -2 number of factory workers
overhead rate per factory worker = 144000/80 =1800 For production no 1 = 1800*60 for product -2 1800*20
108000
36000
total manufacturing overhead
328000
312000
Product 1
Product 2
identifiable and allocated overhead
180000
196000
reallocation of Service department
Department 1- direct labor hours
For product 1- 1.20*40000 =48000 for product- 2 1.2*60000 = 72000
48000
72000
department 2- direct labor hours
57600
86400
total manufacturing overhead
285600
354400
overhead rate per Labor hour
120000/100000
1.2
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