XYZ Ltd has two production departments: assembly and finishing. There are also t
ID: 2564292 • Letter: X
Question
XYZ Ltd has two production departments: assembly and finishing. There are also two support departments: maintenance and human resources (HR). The following estimates for the production departments were made for the current year:
Assembly
Finishing
Total
Manufacturing overheads
$356,000
$471,000
$827,000
The budgeted overhead costs for the year for each support departments are as follows:
Maintenance $142,000
HR $173,000
The usage of the support departments’ output (hours of service) for the year is as follows:
User of the service
Maintenance
HR
Maintenance
0
26
HR
0
0
Assembly
26
34
Finishing
36
48
Use the direct method to allocate the budgeted overhead costs of the Maintenance and HR departments to the production departments (Assembly and Finishing). Enter the amount of total manufacturing overhead borne by the Finishing department.
Assembly
Finishing
Total
Manufacturing overheads
$356,000
$471,000
$827,000
Explanation / Answer
Finishing Direct costs 471000 Maintenance dept. costs 82452 =142000/62*36 HR dept. costs 101268 =173000/82*48 Total manufacturing overhead 654720
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