Pochita & Denji Ltd has two production departments-Moulding and Assembly and three support departments - Information...

  

Transcribed Image Text:

Pochita & Denji Ltd has two production departments-Moulding and Assembly and three support departments - Information Technology, Quality Control and Machinery Maintenance. The Moulding department operates five machines that are operational for 10 hours a day and these machinery are in operation for 250 days annually. The Assembly department utilises 50,000 direct labour hours annually. The prime costs for Component A is $70. The company collated the following information: Users of Support Department Services: Support Department Provision: Information Quality Technology Control 0% Information Technology Quality Control Machinery Maintenance Moulding Assembly Total 0% 12% 8% 24% 56% 100% 0% 15% 51% 34% 100% Machinery Maintenance 9% 15% 0% 19% 57% 100% department as follows: The management accountant has also provided the budgeted costs for each department as follows. Information Technology Quality Control Machinery Maintenance Moulding Assembly $120,404 $130,801 $160,500 $374,598 $419,947 Using the step-down method, allocate the budgeted costs of all support departments and calculate the total overhead cost for each production department. Allocate first the support department which provides service to greatest number of other support departments. Where there is a tie, allocate first the support department with the largest overhead budget cost. Moulding Assembly Department Department Pochita & Denji Ltd has two production departments-Moulding and Assembly and three support departments - Information Technology, Quality Control and Machinery Maintenance. The Moulding department operates five machines that are operational for 10 hours a day and these machinery are in operation for 250 days annually. The Assembly department utilises 50,000 direct labour hours annually. The prime costs for Component A is $70. The company collated the following information: Users of Support Department Services: Support Department Provision: Information Quality Technology Control 0% Information Technology Quality Control Machinery Maintenance Moulding Assembly Total 0% 12% 8% 24% 56% 100% 0% 15% 51% 34% 100% Machinery Maintenance 9% 15% 0% 19% 57% 100% department as follows: The management accountant has also provided the budgeted costs for each department as follows. Information Technology Quality Control Machinery Maintenance Moulding Assembly $120,404 $130,801 $160,500 $374,598 $419,947 Using the step-down method, allocate the budgeted costs of all support departments and calculate the total overhead cost for each production department. Allocate first the support department which provides service to greatest number of other support departments. Where there is a tie, allocate first the support department with the largest overhead budget cost. Moulding Assembly Department Department

Answer rating: 100% (QA)

SOLUTION To allocate the budgeted costs of the support departments using the stepdown method we need to follow these steps Step 1 Determine the order of allocation based on the greatest number of othe... View the full answer