Support Departments Producing Departments General Factory Receiving Assembly Finishing Direct overhead $400,000 $160,000 2,700 Square footage Number of receiving orders Direct labor hours $43,000 5,400 1,680 25,000 $74,000 5,400 1,020 40,000 300
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Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments:
Required:
1. Allocate the
2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
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- Overheads cost analysisRProduction 4 400 000Materials handling 1 000 000Set-up 1 050 000Quality control 1 900 000Materials procurement 400 000Cost driver analysisCost drivers Product A Product B TotalDirect labour hours 320 000 180 000 500 000Number of set-ups 420 280 700Materials movements 700 300 1 000Number of orders 1 300 700 2 000Number of inspections 1 140 760 1 900 Annual outputProduct A 200 000 unitsProduct B 100 000 units Use the information provided below to calculate the overhead cost per product using the followingcosting systems: Traditional Absorption Costing, using direct labour hours as the basis for allocation.…Step-down method (IS first) Dialog content starts Support Departments Operating Departments Step-down Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $390,000 $3,600,000 $8,700,000 $12,470,000 $25,160,000 Allocation of IS costs 360,000 (3,600,000) 1,296,000 1,944,000 $750,000 $0 Allocation of AS costs (750,000) 450,000 300,000 Total budgeted overhead of operating departments $0 $10,446,000 $14,714,000 $25,160,000 Reference Dialog content starts GOVT CORP Direct method $1,674,000 $2,316,000 Step-down (AS first) 1,658,400 2,331,600 Step-down (IS first) 1,746,000 2,244,000Support department cost allocation—sequential method Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows: Support Department Cost Driver Janitorial Department Square footage to be serviced Cafeteria Department Number of employees JanitorialDepartment CafeteriaDepartment CuttingDepartment AssemblyDepartment Department costs $310,000 $169,000 $1,504,000 $680,000 Square feet 50 5,000 1,000 4,000 Number of employees 10 3 30 10 Allocate the support department costs to the production departments using the sequential method. Allocate the support department with the highest department cost first. CuttingDepartment AssemblyDepartment Janitorial Department $ $ Cafeteria Department $ $
- Step-down method (IS first) Dialog content starts Support Departments Operating Departments Step-down Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $390,000 $3,600,000 $8,700,000 $12,470,000 $25,160,000 Allocation of IS costs 360,000 (3,600,000) 1,296,000 1,944,000 $750,000 $0 Allocation of AS costs (750,000) 450,000 300,000 Total budgeted overhead of operating departments $0 $10,446,000 $14,714,000 $25,160,000 Reference Dialog content starts GOVT CORP Direct method $1,674,000 $2,316,000 Step-down (AS first) 1,658,400 2,331,600 Step-down (IS first) 1,746,000 2,244,000 Requirement 1b. Allocate the two support departments' costs to the two operating departments using the reciprocal method. Use repeated iterations. (Round your final answers to the nearest whole dollar.…Support department cost allocation—sequential method Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows: Support Department Cost Driver Janitorial Department Square footage to be serviced Cafeteria Department Number of employees JanitorialDepartment CafeteriaDepartment CuttingDepartment AssemblyDepartment Department costs $310,000 $169,000 $1,504,000 $680,000 Square feet 50 5,000 1,000 4,000 Number of employees 10 3 30 10 Allocate the support department costs to the production departments using the sequential method. Allocate the support department with the highest department cost first. CuttingDepartment AssemblyDepartment Janitorial Department $fill in the blank 1 $fill in the blank 2 Cafeteria Department $fill in the blank 3 $fill in the blank…Direct Method of Support Department Cost Allocation Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments HumanResources GeneralFactory Fabricating Assembly Direct costs $170,000 $350,000 $114,800 $95,000 Normal activity: Number of employees — 60 80 170 Square footage 1,000 — 5,700 13,300 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Valron Company uses the direct method of support department cost allocation. Required:
- Suzanne Corporation manufactures custom cabinets for kitchens. It uses a normal-costing system with two direct cost categories-direct materials and direct manufacturing labor-and one indirect-cost pool, manufacturing overhead costs. View the manufacturing overhead costs information for 2020. Begin by calculating the budgeted indirect cost rate. Identify the formula and then calculate the rate. (Assume the cost allocation base is direct labor hours.) Budgeted indirect cost rate 28 Budgeted manufacturing overhead costs $ 784,000 $ Actual indirect costs incurred 1,134,000 The manufacturing overhead allocated during the year is $ Identify the formula and calculate the underallocated or overallocated manufacturing overhead. (Use parentheses or a minus sign to report overhead overallocated.) Underallocated (overallocated) indirect costs 378,000 Account Work-in-process control Finished goods control Cost of goods sold Total Account Balance (Before Proration) $ $ $ $ Budgeted labor hours…Activity-based and department rate product costing and product cost distortions Black and Blue Sports Inc. manufactures two products: snowboards and skis. The factory overhead incurred is as follows: Indirect labor 507,000 Cutting Department 156,000 Finishing Department 192,000 Total 855,000 The activity hase associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Budgeted Activity Cost Activity Base Production control 237,000 Number of production runs Materials handling 270,000 Number of moves Total 507,000 The activity-base usage quantities and units produced for the two products follow: Number o Production Runs Number of Moves Direct Labor HoursCutting Direct Labor HoursFinishing Units Produced Snowboards 430 5,000 4,000 2,000 6,000 Skis _70 2,500 2,000 4,000 6,000 Total 500 7,500 6,000 6,000 12,000 Instructions 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 315,000 and 540,000 for the Cutting and finishing departments, respectively. 2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). 3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. 4. Determine the total and per-unit cost assigned to each product under activity-based costing. 5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.Budget performance report for a cost center Sneed Industries Company sells vehicle parts to manufacturers of heavy construction equipment. The Crane Division is organized as a cost center. The budget for the Crane Division for the month ended August 31, 20Y6, is as follows (in thousands): During August, the costs incurred in the Crane Division were as follows: Instructions For which costs might the director be expected to request supplemental reports?
- Activity-based department rate product costing and product cost distortions Big Sound Inc. manufactures two products: receivers and loud-speakers. The factory overhead incurred is as follows: Indirect labor 400,400 Cutting Department 198,800 Finishing Department 114,800 Total 714,000 The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Budgeted Activity Cost Activity Base Setup 138,600 Number of setup Quality Control 261,800 Number of inspections Total 400,400 The activity-base usage quantities and units produced for the two products follow: Number o Setup Number of Inspections Direct Labor HoursSubassembly Direct Labor HoursFinal Assembly Units Produced Snowboards 430 5,000 4,000 2,000 6,000 Skis _70 2,500 2,000 4,000 6,000 Total 500 7,500 6,000 6,000 12,000 Instructions 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 5420,000 and 294,000 for the Subassembly and Final Assembly departments, respectively. 2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). 3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. 4. Determine the total and per-unit cost assigned to each product under activity-based costing. 5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.Budget performance report for a cost center Sneed Industries Company sells vehicle parts to manufacturers of heavy construction equipment. The Crane Division is organized as a cost center. The budget for the Crane Division for the month ended August 31, 20Y6, is as follows (in thousands): During August, the costs incurred in the Crane Division were as follows: Instructions Prepare a budget performance report for the director of the Crane Division for the month of August.Travelcraft Company manufactures a complete line of fiberglass suitcases and attaché cases. The firm has three manufacturing departments: Molding, Component, and Assembly. There are also two service departments: Power and Maintenance. The sides of the cases are manufactured in the Molding Department. The frames, hinges, and locks are manufactured in the Component Department. The cases are completed in the Assembly Department. Varying amounts of materials, time, and effort are required for each of the cases. The Power Department and Maintenance Department provide services to the three manufacturing departments. Travelcraft has always used a plantwide overhead rate. Direct-labor hours are used to assign overhead to products. The predetermined overhead rate is calculated by dividing the company's total estimated overhead by the total estimated direct-labor hours to be worked in the three manufacturing departments. Karen Mason, director of cost management, has recommended that Travelcraft…