Azzuma Printing Enterprise (APE) provides variety of printing services and binding works. The printing and binding...

 

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Azzuma Printing Enterprise (APE) provides variety of printing services and binding works. The printing and binding departments are supported by three supporting departments which are the Human Resources, Procurement and Maintenance departments. The costs of these supporting departments are allocated to other departments based on the sequence of the departments as in the table below: Total Square Feet Number Of Machine Of Space Employees Оссиpied 4,000 6,000 20,000 80,000 40,000 150,000 Departments' Sequence Direct Labour Hours Labour Hours 20,000 30,000 50,000 90,000 Hours 1. Human resource 10 2. Procurement 15 3. Maintenance 25 4. Printing 5. Binding Total 40 60,000 30,000 175,000 180,000 235,000 150,000 260,000 450,000 120 210 Budgeted overhead costs for each department for year 2022 are shown below: Overhead Costs (RM) 360,000 141,000 Departments Human resource Procurement Maintenance Printing Binding Total 201,000 525,000 373,500 1,600,500 For overhead allocation purpose, the human resource department's cost is allocated to other departments based on the number of employees in that department while the procurement cost is allocated based on the square feet of space occupied, and the maintenance cost is allocated based on the number of machine hours used by the departments. REQUIRED: (a) Allocate the support departments costs to the other departments using the sequential method. (b) Compute the pre-determined overhead rate for year 2022 and determine the amount of overhead cost assigned to a job if printing department used 15,400 machine hours and binding department used 2,000 of direct labour hours. The allocation based for printing department is machine hours and the allocation based for binding department is direct labour hours. (c) Explain why the sequential method is considered as more accurate compared to the direct method in allocating service department costs to production departments. Azzuma Printing Enterprise (APE) provides variety of printing services and binding works. The printing and binding departments are supported by three supporting departments which are the Human Resources, Procurement and Maintenance departments. The costs of these supporting departments are allocated to other departments based on the sequence of the departments as in the table below: Total Square Feet Number Of Machine Of Space Employees Оссиpied 4,000 6,000 20,000 80,000 40,000 150,000 Departments' Sequence Direct Labour Hours Labour Hours 20,000 30,000 50,000 90,000 Hours 1. Human resource 10 2. Procurement 15 3. Maintenance 25 4. Printing 5. Binding Total 40 60,000 30,000 175,000 180,000 235,000 150,000 260,000 450,000 120 210 Budgeted overhead costs for each department for year 2022 are shown below: Overhead Costs (RM) 360,000 141,000 Departments Human resource Procurement Maintenance Printing Binding Total 201,000 525,000 373,500 1,600,500 For overhead allocation purpose, the human resource department's cost is allocated to other departments based on the number of employees in that department while the procurement cost is allocated based on the square feet of space occupied, and the maintenance cost is allocated based on the number of machine hours used by the departments. REQUIRED: (a) Allocate the support departments costs to the other departments using the sequential method. (b) Compute the pre-determined overhead rate for year 2022 and determine the amount of overhead cost assigned to a job if printing department used 15,400 machine hours and binding department used 2,000 of direct labour hours. The allocation based for printing department is machine hours and the allocation based for binding department is direct labour hours. (c) Explain why the sequential method is considered as more accurate compared to the direct method in allocating service department costs to production departments.

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a Sequential method in RM Support Departments Operating Departments Human Procurement Maintenance Pr... View the full answer