Selecting Cost Allocation Bases and Direct Method Allocations

Seattle Company has three producing departments $($P$1,$ P$2,$ and P$3)$ for which direct department costs are accumulated. In January, the following indirect costs of operation were incurred.

Plant manager$$s salary and office expense $$28,700$

Plant security $8,400$

Plant nurse$$s salary and office expense $9,800$

Factory depreciation $($building$)28,000$

Equipment depreciation $21,000$

Machine maintenance $9,800$

Plant cafeteria cost subsidy $7,000$

$$112,700$

The following additional data have been collected for the three producing departments:

P$1$ P$2$ P$3$

Number of employees $203010$

Space occupied $($square feet$)12,0006,0006,000$

Direct labor hours $3,4005,0001,600$

Machine hours $1,500600900$

Number of nurse office visits $25205$

Required

a$.$ Determine the common basis for allocation for each of the four cost pools identified below. In addition, calculate the total cost in each of the four cost pools for January.

Cost pool Allocation base Total Cost in pool

$1.$ Plant manager's exp. Answer

Number of employees

Answer

$28,700$

Cafeteria subsidy Answer

$7,000$

Answer

$35,700$

$2.$ Plant security Answer

Space occupied $($square feet$)$

Answer

$8,400$

Bldg depreciation Answer

$28,000$

Answer

$36,400$

$3.$ Nurse's expense Answer

Number of nurse office visits

Answer

$9,800$

$4.$ Machine maintenance Answer

Machine hours

Answer

$9,800$

Equipment depreciation Answer

$21,000$

Answer

$30,800$

b$.$ Determine the amounts allocated to the three producing departments using the allocation bases used in requirement $($a$).$

P$1$ P$2$ P$3$ Total

Allocated costs Answer

$11,900$

Answer

$17,850$

Answer

$5,950$

Answer

$35,700$

c$.$ How much indirect cost would be allocated to each producing department if Seattle Company were using a plantwide rate based on direct labor hours?

Note: Round your final answers below to the nearest whole dollar.

Note: Do not round the rates used in your calculations.

P$1$ P$2$ P$3$ Total

Allocated costs Answer

$38,318$

Answer

$56,350$

Answer

$18,032$

Answer

$112,700$

d$.$ How much indirect cost would be allocated to each producing department if Seattle Company were using a plantwide rate based on machine hours?

Note: Round your final answers below to the nearest whole dollar.

Note: Do not round the rates used in your calculations.

P$1$ P$2$ P$3$ Total

Allocated costs Answer

$15,400$

Answer

$6,160$

Answer

$9,240$

Answer

$30,800$