3. (30 points) A company has two producing department, mechanical (M) division and electronic (E) division,...
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3. (30 points) A company has two producing department, mechanical (M) division and electronic (E) division, in addition to three service departments, facility management (FM) division, receiving and handling (RH) division, and human resource (HR) division. The company's main production activity is assembling, from a variety of components purchased. The assembly work in the mechanical division heavily relies on labor force. Its costs depend primarily on the direct-labor hours. On the other hand, the electronic division is highly automated and its costs can be mainly determined by the number of components used in each product. The costs of facility management depend primarily on the space used. The costs of receiving and handling division depend primarily on the number of components handled. The costs of human resource depend primarily on the labor hours. Two products, P1 and P2, are produced in the mechanical division. Another two products, PE1 and P2, are produced in the electronic division. The material costs, number of components and labor hours used are listed in the table below. Direct- Materials Cost PM1 $115 PM2 $130 PE1 $100 PE2 $150 Number of Components 18 16 8 12 Direct- Labor Hours 3.0 6.0 1.0 0.8 The company's budget for 20X5 has been prepared and listed below. Direct department costs (excluding direct materials) Space occupied (ft) FM M RH HR E $100,000 $150,000 $120,000 $820,000 $700,000 Number of products produced Number of components used Direct-labor hours 6,000 2,000 60,000 30,000 7,000 9,000 8 15 25,000 6,000 Hint: The number of components in the above table is only for a single unit. FM is the only service department that its cost is allocated to other service departments. (1) Allocate the costs of service departments using the step-down method (total RH and HR costs are only allocated to M and E). (2) Compute the cost per direct-labor hour in the mechanical division and the cost per component in the electronic division. (3) Compute the cost per unit of the product for all four products. 3. (30 points) A company has two producing department, mechanical (M) division and electronic (E) division, in addition to three service departments, facility management (FM) division, receiving and handling (RH) division, and human resource (HR) division. The company's main production activity is assembling, from a variety of components purchased. The assembly work in the mechanical division heavily relies on labor force. Its costs depend primarily on the direct-labor hours. On the other hand, the electronic division is highly automated and its costs can be mainly determined by the number of components used in each product. The costs of facility management depend primarily on the space used. The costs of receiving and handling division depend primarily on the number of components handled. The costs of human resource depend primarily on the labor hours. Two products, P1 and P2, are produced in the mechanical division. Another two products, PE1 and P2, are produced in the electronic division. The material costs, number of components and labor hours used are listed in the table below. Direct- Materials Cost PM1 $115 PM2 $130 PE1 $100 PE2 $150 Number of Components 18 16 8 12 Direct- Labor Hours 3.0 6.0 1.0 0.8 The company's budget for 20X5 has been prepared and listed below. Direct department costs (excluding direct materials) Space occupied (ft) FM M RH HR E $100,000 $150,000 $120,000 $820,000 $700,000 Number of products produced Number of components used Direct-labor hours 6,000 2,000 60,000 30,000 7,000 9,000 8 15 25,000 6,000 Hint: The number of components in the above table is only for a single unit. FM is the only service department that its cost is allocated to other service departments. (1) Allocate the costs of service departments using the step-down method (total RH and HR costs are only allocated to M and E). (2) Compute the cost per direct-labor hour in the mechanical division and the cost per component in the electronic division. (3) Compute the cost per unit of the product for all four products.
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