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Pellem 2014.marko The Central Valley Company has prepared department overhead budgets for budgeted volume levels before alle Sepport departments Building and grounds 545,000 Personne 5100 General plant administration 537,320 Cafeteria operating loss 5970 Stonerom 59,90 Total for support departments 598.00 Operating departments Machining 536.000 Assembly $46,000 Teal for operating departments $82,600 Total for support and operating departments $176,180 Management has decided that the most appropriate imetery costs are achieved by using individual deportment overhead rates. These rates we developed after support department costs are allocated to operating departments Bases for allocation are to be selected from the following Direct Indirect Square Feet of Department Number of Manufacturing Floor Space Number of Manufacturing Lahorlours Employees Occupied Laber-Hours Requisition Building and 0 0 0 grounds 0 Personnel (Bases used is number of 0 0 2.500 0 employees) General plant 0 40 12.000 0 administration 0 Cafeteria 0 10 5.000 3.000 0 operating loss Store 5 6.000 2,000 0 Machining 1.000 55 22.000 13.000 6000 Assembly 32.000 140 202.00 25,000 4000 Tocal 40,000 250 250.000 44000 10,000 0 0 Required: (1) Using the step-down method, allocate support department costs. Develop the rates per direct manufacturing lobor-hour for machining and assembly. Alleate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate Use the direct method. rework requirement (3) Based on the following information about two job determine the tal overhead comes for each job by using stes developed in ) requirement and (by requirement 2 Direct Manufacturing laboritours Machining Assembly Jobs 17 Job 19 20 (4) The company evaluates the performance of the operating department managen based on how well they managed their tal costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained is requirements and 27 Explan. Problem 2 (14 marks) The Central Valley Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: Support departments: Building and grounds $45,000 Personnel $300 General plant administration $37,320 Cafeteria operating loss $970 Storeroom $9.990 Total for support departments $93,580 Operating departments: Machining $36,000 Assembly $46,000 Total for operating departments $82,600 Total for support and operating departments S176,180 Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. These rates are developed after support-department costs are allocated to operating departments. Bases for allocation are to be selected from the following: Direct Square Feet of Department Indirect Number of Manufacturing Floor Space Number of Manufacturing Labor-Hours Employees Occupied Labor-Hours Requisitions Building and 0 0 0 0 0 grounds Personnel (Basis used is number of 0 0 2,500 0 employees) General plant administration 12,000 Cafeteria 0 10 5,000 operating loss 3,000 0 Storeroom 0 5 6,000 2,000 0 Machining 8.000 55 22.000 13.000 6,000 Assembly 32.000 140 202.500 26,000 4.000 Total 40,000 250 250.000 44,000 10,000 0 0 40 0 0 Required: (1) Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate. (2) Using the direct method, rework requirement 1. (3) Based on the following information about two jobs, determine the total overhead costs for each job by using rates developed in (a) requirement 1 and (b) requirement 2. Direct Manufacturing Labor-Hours Machining Assembly 17 7 9 20 Job 88 Job 89 (4) The company evaluates the performance of the operating department managers based on how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained in requirements 1 and 2? Explain. END OF QUESTIONS