Exam 7: Departmental Overhead Costing

Kleinveld Inc. The Machinery department and Assembly department are two producing departments in Kleinveld Inc. Machinery’s total overhead is $30 000, using 200 machine hours and 500 direct labour hours. Assembly’s total overhead cost is $45 000, using 300 machine hours and 500 direct labour hours. The Machinery department overhead cost driver for product cost allocation is machine hours, while the Assembly department uses direct labour hours to allocate overhead costs to products. -What is the overhead allocated to a product that uses 4 machine hours in both departments?

Danville Manufacturing The Danville Manufacturing Company has two service departments and two producing departments. The following data are available for 2006. Service Dept. 1 Service Dept. 2 Producing 1 Producing Department Costs \ 12000 \ 8000 \ 60000 \ 70000 Number of Transactions 6000 4000 6000 14000 Square Feet Occupied 2000 1000 4000 6000 -Assuming that Danville Manufacturing Company uses the direct method of allocating service costs,the amount of service department 1 costs allocated to producing 1 would be: (If necessary,round your answer to the nearest whole number. )

Mega Manufacturing The Mega Manufacturing Company has two service departments and two producing departments. The following data are available for 2013. Service Service Producing Producing Dept.1 Dept.2 1 2 Department Costs \ 40000 \ 30000 \ 90000 \ 70000 Machine hours 8000 4000 20000 16000 Square Feet Occupied 3000 6000 9000 12000 The costs of service departments 1 and 2 are allocated on the basis of machine hours and square feet occupied, respectively. Service department 1 is allocated first. -Assuming that Mega Manufacturing Company allocates service department 1 costs first,the amount of service department 1 costs allocated to service department 2 under the step method would be:

Motlop Manufacturing The Motlop Manufacturing Company has two service departments and two producing departments. The following data are available for 2013. Service Service Producing Producing Dept. 1 Dept. 2 1 2 Department Costs \ 10000 \ 15000 \ 90000 \ 70000 Machine hours 10000 5000 10000 20000 Labour hours 5000 5000 12000 8000 The costs of service departments 1 and 2 are allocated on the basis of machine hours and labour hours respectively. Service department 1 is allocated first. -Assuming that Motlop Manufacturing Company uses the direct method for allocating service costs,the amount of service department 2 costs allocated to producing 2 would be:

Which of the following expenses is most likely to be a direct departmental overhead cost of a department in a factory?

Kleinveld Inc. The Machinery department and Assembly department are two producing departments in Kleinveld Inc. Machinery’s total overhead is $30 000, using 200 machine hours and 500 direct labour hours. Assembly’s total overhead cost is $45 000, using 300 machine hours and 500 direct labour hours. The Machinery department overhead cost driver for product cost allocation is machine hours, while the Assembly department uses direct labour hours to allocate overhead costs to products. -What is the overhead allocated to a product that uses 4 direct labour hours in Machinery and 4 machine hours in Assembly?

Kleinveld Inc. The Machinery department and Assembly department are two producing departments in Kleinveld Inc. Machinery’s total overhead is $30 000, using 200 machine hours and 500 direct labour hours. Assembly’s total overhead cost is $45 000, using 300 machine hours and 500 direct labour hours. The Machinery department overhead cost driver for product cost allocation is machine hours, while the Assembly department uses direct labour hours to allocate overhead costs to products. -What is the overhead allocated to a product if the company uses a plant wide rate based on direct labour hours and a product uses 4 direct labour hours?

Sharon Manufacturing The Sharon Manufacturing Company has two service departments and two producing departments. The following data are available for 2013. Service Service Producing Producing Dept. 1 Dept. 2 1 2 Department Costs \ 20000 \ 12000 \ 80000 \ 90000 Machine hours 12000 8000 12000 60000 Square Feet Occupied 3000 3000 9000 6000 The costs of service departments 1 and 2 are allocated on the basis of machine hours and square feet occupied, respectively. Total overheads from producing departments are allocated to products on the basis of direct labour hours, which are 5000 in Producing Department 1 and 2000 hours in Producing Department 2. Service department 1 is allocated first. -Assuming that Sharon Manufacturing Company allocates service department 1 costs first,the amount of service department 2 costs allocated to producing department 1 under the step-down method would be:

The reciprocal method is superior to the step-down method and direct method.To what extent do you agree or disagree with this statement? Please explain your answer.

Sharon Manufacturing The Sharon Manufacturing Company has two service departments and two producing departments. The following data are available for 2013. Service Service Producing Producing Dept. 1 Dept. 2 1 2 Department Costs \ 20000 \ 12000 \ 80000 \ 90000 Machine hours 12000 8000 12000 60000 Square Feet Occupied 3000 3000 9000 6000 The costs of service departments 1 and 2 are allocated on the basis of machine hours and square feet occupied, respectively. Total overheads from producing departments are allocated to products on the basis of direct labour hours, which are 5000 in Producing Department 1 and 2000 hours in Producing Department 2. Service department 1 is allocated first. -Assuming that Sharon Manufacturing Company uses the direct method of allocating service costs,the amount of service department 1 costs allocated to producing 1 would be: (If necessary,round your answer to the nearest whole number. )

Mega Manufacturing The Mega Manufacturing Company has two service departments and two producing departments. The following data are available for 2013. Service Service Producing Producing Dept.1 Dept.2 1 2 Department Costs \ 40000 \ 30000 \ 90000 \ 70000 Machine hours 8000 4000 20000 16000 Square Feet Occupied 3000 6000 9000 12000 The costs of service departments 1 and 2 are allocated on the basis of machine hours and square feet occupied, respectively. Service department 1 is allocated first. -Assuming that Mega Manufacturing Company uses the reciprocal method of allocating service costs,what is the total overhead that will be allocated from service department 2,adjusted for the reciprocal method?

Janine Pty Limited wishes to allocate rent costs in her organisation.Which of the four drivers below would you consider best for allocating this cost?

Townsville Manufacturing has the following overhead costs in their four departments.Quality Control and Maintenance are the service departments,while Mixing and Fabricating are the production departments.There is currently $40 000 in Quality Control overheads,$70 000 in Maintenance overheads,$80 000 in Mixing overheads and $100 000 in Fabricating overheads. Quality control Maintenance Mixing Fabricating Inspections 20 100 125 125 Machine hours 100 30 200 300 Quality Control overheads are allocated to production departments using the number of inspections,while Maintenance overheads are allocated to production departments using machine hours.The company has decided to use the step-down method to allocate overhead costs to the production departments.The Quality Control department is allocated first. Required: A.How much overhead is allocated to the production departments from the service departments? B.What is the total overhead in the production departments after the re-allocation?

Hobart Manufacturing has the following overhead costs in their four departments.Inspection and Tech Support are the service departments,while Mixing and Fabricating are the production departments.There is currently $20 000 in Inspection overheads,$35 000 in Tech Support overheads,$70 000 in Mixing overheads and $80 000 in Fabricating overheads. HR Maintenance Mixing Fabricating Inspections 30 100 120 80 Machine hours 200 30 350 150 Inspection overheads are allocated to production departments using number of inspections,while Tech Support overheads are allocated to production departments using support hours.The company has decided to use the direct method to allocate overhead costs to the production departments. Required: A.How much overhead is allocated to the production departments from the service departments? B.What is the total overhead in the production departments after the re-allocation?

Motlop Manufacturing The Motlop Manufacturing Company has two service departments and two producing departments. The following data are available for 2013. Service Service Producing Producing Dept. 1 Dept. 2 1 2 Department Costs \ 10000 \ 15000 \ 90000 \ 70000 Machine hours 10000 5000 10000 20000 Labour hours 5000 5000 12000 8000 The costs of service departments 1 and 2 are allocated on the basis of machine hours and labour hours respectively. Service department 1 is allocated first. -Assuming that Motlop Manufacturing Company allocates service department 1 costs first,the amount of service department 2 costs allocated to producing department 1 under the step-down method would be:

Brynne's Tenpin Bowling has two departments.Of these,Department Y occupies 40 labour hours of time per day while Department Z occupies 20 labour hours per day.If overhead costs are allocated on the basis of labour hours,how much in overhead should be allocated to Department Y if overheads are $2100 per fortnight?

Mega Manufacturing The Mega Manufacturing Company has two service departments and two producing departments. The following data are available for 2013. Service Service Producing Producing Dept.1 Dept.2 1 2 Department Costs \ 40000 \ 30000 \ 90000 \ 70000 Machine hours 8000 4000 20000 16000 Square Feet Occupied 3000 6000 9000 12000 The costs of service departments 1 and 2 are allocated on the basis of machine hours and square feet occupied, respectively. Service department 1 is allocated first. -Assuming that Mega Manufacturing Company allocates service department 1 costs first,the amount of service department 1 costs allocated to service department 2 under the direct method would be:

What overhead driver might best relate to the total overhead cost of Minerals Quality Control,a highly labour intensive operating division of BHP Billiton,a large mining company?

Which of the following expenses is most likely to be an indirect departmental overhead cost of a department in a factory?

Shell Harbour Productions has two production departments,Assembly and Finishing.The total overhead cost in Assembly is $450?000 and Finishing is $25?000.Assembly is driven by machine hours,and Finishing by labour hours.There are 4000 labour hours and 15?000 machine hours in Assembly,while there are 5000 labour hours and 8000 machine hours in Finishing. Required: A.What is the overhead rate per unit for Assembly,and for Finishing? B.How much overhead is applied to a product that uses 3 labour hours in Assembly and 7 labour hours in Finishing,as well as 9 machine hours in Assembly and 4 machine hours in Finishing?