1. Determine the total estimated overhead cost for each of the producing departments after allocating the cost of the service department: a. Using employee headcount as the allocation base. b. Using occupied space as the allocation base. c. Using productive capacity as the allocation base. d. Using the 3-year average use as the allocation base. a. Using employee headcount as the allocation base b. Using occupied space as the allocation base c. Using productive capacity as the allocation base d. Using the 3-year average use as the allocation base P1 P2 Total
1. Determine the total estimated overhead cost for each of the producing departments after allocating the cost of the service department: a. Using employee headcount as the allocation base. b. Using occupied space as the allocation base. c. Using productive capacity as the allocation base. d. Using the 3-year average use as the allocation base. a. Using employee headcount as the allocation base b. Using occupied space as the allocation base c. Using productive capacity as the allocation base d. Using the 3-year average use as the allocation base P1 P2 Total
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vd
Transcribed Image Text:Required:
1. Determine the total estimated overhead cost for each of the producing departments after allocating the cost of the service
department
a. Using employee headcount as the allocation base.
b. Using occupied space as the allocation base.
c. Using productive capacity as the allocation base.
d. Using the 3-year average use as the allocation base.
a. Using employee headcount as the allocation base
b. Using occupied space as the allocation base
c. Using productive capacity as the allocation base
d. Using the 3-year average use as the allocation base
P1
P2
Total
Transcribed Image Text:Great Ape Glassworks manufactures glass used for the screens on smartphones. It has two producing departments,
P1 and P2, and only one service department, S1. The company is able to track overhead to the various departments
but wants to allocate the service department costs to the producing departments. However, the company is not sure
which of the multiple allocation bases should be selected. The data it collected appear in the table below.
Department
22
Overhead
Assigned
$ 150,000
250,000
74,000
Potential allocation base
Employee headcount
Space used (in square feet)
Part 1 (Static)
Productive capacity (in units)
3-year average percentage of 51 output used i
P1
60
2,000
50,000
60%
P2
20
6,000
75,000
40%
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