Question 2 Combined Manufacturers Ltd (CML) has 3 support departments: Equipment Maintenance, Quality Control and Material...

 

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Question 2 Combined Manufacturers Ltd (CML) has 3 support departments: Equipment Maintenance, Quality Control and Material Handling Department. The company has two departments that are directly engaged in production: The Bending Department and the Welding Department. The usage of the three-support department output is as follows: Service Provider Departments and percentage of their services used by the user departments Equipment Maintenance Department Bending department and Welding department use 30% and 70% of the services, respectively Quality Control Department Equipment Maintenance Department 5% Material Handling Department 20% Bending Department 25% Welding Department 50% Material Handling Department Quality Control Department 5% Bending Department 35% Welding Department 60% The budgeted costs in the respective departments were as follows: Support departments: Equipment maintenance Quality control Material handling Production departments: Bending Welding Total overhead costs Required $ 200 000 120 000 300 000 $ 620 000 15 marks $ 600 000 100 000 $ 700 000 $ 1320 000 Use the Step-down method to allocate the budgeted costs of the Equipment Maintenance, Quality Control and Material Handling to the Bending and Welding Departments. CML allocates the costs of the Quality Control Department first. (Note: Round off your answers to the nearest whole number) 2 Question 2 Combined Manufacturers Ltd (CML) has 3 support departments: Equipment Maintenance, Quality Control and Material Handling Department. The company has two departments that are directly engaged in production: The Bending Department and the Welding Department. The usage of the three-support department output is as follows: Service Provider Departments and percentage of their services used by the user departments Equipment Maintenance Department Bending department and Welding department use 30% and 70% of the services, respectively Quality Control Department Equipment Maintenance Department 5% Material Handling Department 20% Bending Department 25% Welding Department 50% Material Handling Department Quality Control Department 5% Bending Department 35% Welding Department 60% The budgeted costs in the respective departments were as follows: Support departments: Equipment maintenance Quality control Material handling Production departments: Bending Welding Total overhead costs Required $ 200 000 120 000 300 000 $ 620 000 15 marks $ 600 000 100 000 $ 700 000 $ 1320 000 Use the Step-down method to allocate the budgeted costs of the Equipment Maintenance, Quality Control and Material Handling to the Bending and Welding Departments. CML allocates the costs of the Quality Control Department first. (Note: Round off your answers to the nearest whole number) 2

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Step method of allocation Departmental costs before ... View the full answer