Rabia Company has two support departments, Human Resources and Maintenance, and two producing departments, Fabrication and...
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Rabia Company has two support departments, Human Resources and Maintenance, and two producing departments, Fabrication and Assembly Budgeted overhead Direct labor hours Machine hours Number of employees Support Departments Human Resources $40,000 2,000 - 4 Maintenance $72,000 2,500 - Producing Departments Fabrication $140,000 8,000 12,000 15 Assembly $160,000 10,000 8,000 25 5 The company only had mixed cost. Human Resource costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours. Predetermined overhead rates for fabrication and assembly are based on direct labor hours. Required: 1. Calculate the allocation ratios. 2. Using the direct method, allocate the costs of the Human Resources and Maintenance departments to the Fabrication and Assembly departments. Also write the final cost of both the production departments. 3. What if the Maintenance Department had 50 employees? How would that affect the allocation of Human Resources Department costs to the Fabrication and Assembly departments? Rabia Company has two support departments, Human Resources and Maintenance, and two producing departments, Fabrication and Assembly Budgeted overhead Direct labor hours Machine hours Number of employees Support Departments Human Resources $40,000 2,000 - 4 Maintenance $72,000 2,500 - Producing Departments Fabrication $140,000 8,000 12,000 15 Assembly $160,000 10,000 8,000 25 5 The company only had mixed cost. Human Resource costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours. Predetermined overhead rates for fabrication and assembly are based on direct labor hours. Required: 1. Calculate the allocation ratios. 2. Using the direct method, allocate the costs of the Human Resources and Maintenance departments to the Fabrication and Assembly departments. Also write the final cost of both the production departments. 3. What if the Maintenance Department had 50 employees? How would that affect the allocation of Human Resources Department costs to the Fabrication and Assembly departments?
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Step 1 Maintenance Cost The sacrifices made by the business entity to maintai... View the full answer
Related Book For
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen
Posted Date:
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