Mkali wa Trigonometric Inc. has three producing departments (Sine, Cosine, and Tangent) and two service departments (Rhombus and Triangle). Data that summarize overhead activity for January are:
Producing Departments Service Departments
Sine Cosine Tangent Rhombus Triangle
Total overhead before service
department allocations.............. Tshs.50,000 Tshs.80,000 Tshs.30,000 Tshs.40,000 Tshs.20,000
Square footage
occupied........................................ 3,000 4,000 3,000 1,000 1,500
Number of employees.............................. 50 30 20 10 10
Rhombus costs are distributed on the basis of square footage occupied, while Triangle costs are distributed on the basis of number of employees. The direct method is used for allocating service department costs to producing departments.
Required: Prepare a schedule indicating the detailed components of overhead costs for the producing and service departments, including the directly assigned and allocated overhead
SOLUTION
Producing Departments Service Departments
Sine Cosine Tangent Rhombus Triangle
Total overhead before service
department allocations Tshs.50,000 Tshs. 80,000 Tshs.30,000 Tshs.40,000 Tshs.20,000
Allocation of Rhombus costs:
(Base = square footage)
3,000
Sine: ‑-‑‑‑‑‑‑‑‑ x Tshs.40,000........ 12,000 -‑ -‑ (12,000)
10,0001
4,000
Cosine: ‑‑‑‑‑--‑‑ x Tshs.40,000.............. -‑ 16,000 -‑ (16,000)
10,000
3,000
Tangent: ‑‑--‑‑‑‑‑ x Tshs.40,000............ -- -‑ 12,000 (12,000)
10,000
Allocation of Triangle costs:
(Base = number of employees)
50
Sine: ‑--‑‑‑ x Tshs.20,000............ 10,000 -‑ -‑ (10,000)
1002
30
Cosine: ‑‑‑‑ x Tshs.20,000.................... -‑ 6,000 -‑ (6,000)
100
20
Tangent: ‑-‑‑‑‑ x Tshs.20,000........ -‑ -‑ 4,000 (4,000)
100
Total overhead................................ Tshs.72,000 Tshs.102,000 Tshs.46,000
1Denominator = 3,000 + 4,000 + 3,000 = 10,000 square feet
or 30% + 40% + 30%
2Denominator = 50 + 30 + 20 = 100 employees
or 50% + 30% + 20%
No comments:
Post a Comment