PQR Ltd has two production departments Machining and Finishing. There are three service departments: Human Resource, Maintenance and Design. The budgeted Cost in these service departments are as follows: Particulars Variable Fixed Total User of service HR HR 1,00,000 4,00,000 5,00,000 Maintenance Design Machining Finishing Total The usage of these service departments' output during the year completed are as

 

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PQR Ltd has two production departments Machining and Finishing. There are three service departments: Human Resource, Maintenance and Design. The budgeted Cost in these service departments are as follows: Particulars Variable Fixed Total User of service HR HR 1,00,000 4,00,000 5,00,000 Maintenance Design Machining Finishing Total The usage of these service departments' output during the year completed are as follows: Maintenance 1,60,000 3,00,000 4,60,000 Provider of Service HR - 500 500 4000 5000 10,000 Maintenance In $ Design 1,00,000 6,00,000 7,00,000 500 3500 4000 8000 In Hours of service Design 4500 1500 6000 Required: 1) Use direct method to reapportion PQR Ltd.'s Service departments to its production departments: 2) Use Step-down method to reapportion the firm's service department cost.

Expert Answer

Q1: Using Direct Method HR: Machining: (500/10,000) x (1,60,000 + 4,60,000) = $… View the full answer