C15Q5 Need help Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate.2.Using the direct method, rework requirement 1.3.Based on the following information about two jobs, determine the total overhead costs for each job by using rates developed in (a) requirement 1 and (b) requirement 2. Direct Manufacturing Labor–Hours MachiningAssemblyJob 88232Job 895224.The company evaluates the performance of the operating department managers on the basis of how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained in requirements 1 and 2? Explain.PrintDone The Southern Wind Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows:(Click the icon to view the department overhead budgets.)Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. These rates are developed after support-department costs are allocated to operatingdepartments. Bases for allocation are to be selected from the following:E (Click the icon to view the data.)Read the requirements.Requirement 1. Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the supportdepartments in the order given in this problem. Use the allocation base for each support department you think is most appropriate.Begin by selecting the allocation base for each support department.Support DepartmentAllocation BaseBuilding and groundsPersonnelGeneral plant administration lortmont overbeed rotes Theee rotoo ore develenedofterounnent donert mont ooote ore elleeatosd to oneratingiData TableiData TableSupport departments:Square Feet ofFloor SpaceOccupiedDirectIndirectBuilding and grounds6,400ManufacturingNumber ofManufacturingLabor-HoursNumber ofPersonnel612DepartmentLabor-HoursEmployeesRequisitionsGeneral plant administration32,292Building and groundsPersonnela3,600Cafeteria: Operating loss976General plant3,008Storeroom2$43,288administration363,600Operating departments:Cafeteria: operating loss9.1,8001,000Machining35,300Storeroom7,2003,000Assembly47,00082,300Machining9,0004536,0005,0002,500$ 125,588Assembly9,0008127,80014,4002,500Total for support and operating departments18,00018080,00023,4005,000Total

under this method, the cost of the service departments is allocated to other service departments as…

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Cornerstones of Cost Management (Cornerstones Series)

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ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

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Problem 31P: The actions listed next are associated with either an activity-based operational control system or a...

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C15Q5

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Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate.

Using the direct method, rework requirement 1.

Based on the following information about two jobs, determine the total overhead costs for each job by using rates developed in (a) requirement 1 and (b) requirement 2.

	Direct Manufacturing Labor–Hours
	Machining	Assembly
Job 88	23	2
Job 89	5	22

The company evaluates the performance of the operating department managers on the basis of how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained in requirements 1 and 2? Explain.

PrintDone

The Southern Wind Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows:
(Click the icon to view the department overhead budgets.)
Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. These rates are developed after support-department costs are allocated to operating
departments. Bases for allocation are to be selected from the following:
E (Click the icon to view the data.)
Read the requirements.
Requirement 1. Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support
departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate.
Begin by selecting the allocation base for each support department.
Support Department
Allocation Base
Building and grounds
Personnel
General plant administration

lortmont overbeed rotes Theee rotoo ore develenedofterounnent donert mont ooote ore elleeatosd to onerating
i
Data Table
i
Data Table
Support departments:
Square Feet of
Floor Space
Occupied
Direct
Indirect
Building and grounds
6,400
Manufacturing
Number of
Manufacturing
Labor-Hours
Number of
Personnel
612
Department
Labor-Hours
Employees
Requisitions
General plant administration
32,292
Building and grounds
Personnela
3,600
Cafeteria: Operating loss
976
General plant
3,008
Storeroom
2$
43,288
administration
36
3,600
Operating departments:
Cafeteria: operating loss
9.
1,800
1,000
Machining
35,300
Storeroom
7,200
3,000
Assembly
47,000
82,300
Machining
9,000
45
36,000
5,000
2,500
$ 125,588
Assembly
9,000
81
27,800
14,400
2,500
Total for support and operating departments
18,000
180
80,000
23,400
5,000
Total

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