QUESTION I $($CLO$3($CIO Marks$)$

Aberdeen Corporation has one support department, Engineering Services, and two production departments, Machining and Assembly. The following data relate to the $2017$ budget for the Engineering Services Department:

Practical capacity

Fixed costs of the Engineering Services Department in the

$8,000$ hours

$6,000$

labor$-$hour to $8,000$ labor$-$hour relevant range

$$280,000$

Budgeted usage $($quantity$)$ of engineering services labor$-$hours required to support the productions departments:

Machining department

$2,500$ hours

Assembly department

$4,500$ hours

Total

$7\mathrm{.}000$ hours

Budgeted variable cost per engineering services labor$-$hour in the $6,000$ labor$-$hour to $8,000$ labor$-$hour relevant range

$$25$ per hour used

Actual usage $($quantity$)$ of Engineering Services labor$-$hours required to support the production departments:

Machining department

$2,000$ hours

Assembly department

$4,000$ hours ${?}_{(})$

Total

$6\mathrm{.}000$ hours ${?}_{(})$

$1.$Using the single$-$rate method, calculate the cost to be allocated to the Machining and Assembly Departments if the allocation rate is based on budgeted costs and budgeted quantity of Engineering Services and allocated based on actual Engineering Services hours used in each department.

$2.$Using the dual$-$rate method, calculate the cost to be allocated to the Machining and Assembly Departments if $($a$)$ variable costs are allocated based on the budgeted variable cost per hour for actual hours used in each department and $($b$)$ fixed costs are allocated based on budgeted fixed costs per hour and the budgeted number of hours for each department.

$3.$Using the single$-$rate method, calculate the cost to be allocated to the Machining and Assembly Departments if the allocation rate is based on budgeted costs and practical capacity of the Engineering Services Department and allocated based on actual Engineering Services hours used in each department.

$4.$Using the dual$-$rate method, calculate the cost to be allocated to the Machining and Assembly Departments if $($a$)$ variable costs are allocated based on the budgeted variable cost per hour for actual hours used in each department and $($b$)$ the fixed$-$cost

$1$

allocation rate is based on budgeted costs and practical capacity of Engineering Services Department and fixed costs are allocated based on budgeted Engineering Service hours used in each department.

OUESTION $2($CLO$7)(10$Marks$)$

Casey Corporation produces a special line of basketball hoops. Casey Corporation produces the hoops in batches. To manufacture a batch of the basketball hoops, Casey Corporation must set up the machines and molds. Setup costs are batch$-$level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of basketball hoops.

Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup$-$hours. The following information pertains to January $2005.$

$\backslash$table$[[,\backslash$table$[[$Static$-$budget$],[$Amounts$]],\backslash$table$[[$Actual$],[$Amounts$]]],[$Basketball hoops produced and sold,$30,000,28,000],[$Batch size $($number of units per batch$),200,250],[$Setup$-$hours per batch $54,,],[$Variable overhead cost per setup hour,$$10,$$$9$