1. Under direct method of allocating service department costs, what are the total service costs allocated to the machining and assembly departments, respectively? a. 382,500 and 167,500 b. 300,000 and 130,000 c. 412,500 and 137,500 d. 330,000 and 220,000
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
8. Adidas Inc. is exploring ways to allocate the cost of service departments such as Quality control and Maintenance
to the production departments such as Machining and assembly. The controller of the company has provided the
following information:
Quality
Control Maintenance Machining Assembly Total
Budgeted
overhead costs
before allocation
P350,000 P200,000 P400,000 P300,000 P1,250,000
Budgeted
machine hours - - 50,000 hrs - 50,000 hrs
Budgeted direct
labor hours - - - 25,000 hrs 25,000 hrs
Budgeted hours
of service of
quality control
- 7,000 hrs 21,000 hrs 7,000 hrs 35,000 hrs
Budgeted hours
of service
maintenance
10,000 hrs - 18,000 hrs 12,000 hrs 40,000 hrs
1. Under direct method of allocating service department costs, what are the total service costs allocated to
the machining and assembly departments, respectively?
a. 382,500 and 167,500
b. 300,000 and 130,000
c. 412,500 and 137,500
d. 330,000 and 220,000
2. Under the step-down method of allocating service department costs from quality control to maintenance,
what are the total service costs allocated to the machining and assembly departments, respectively?
a. 372,000 and 178,000
b. 412,500 and 137,500
c. 330,000 and 220,000
d. 405,000 and 145,000
3. Under the reciprocal method of allocating service department costs, what are the total amount of quality
control costs and total amount of maintenance costs, respectively, to be allocated to the other
departments?
a. 421,053 and 284,211
b. 435,201 and 290,640
c. 410,250 and 282,050
d. 435,800 and 287,160
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