11. Assume that the company uses direct method of allocation, how much is the amount of custodial services allocated to cutting department? 12. Assume the company uses direct method of allocation, what is the overhead rate of the assembly department? 13. Assume the company uses step method of allocation, with custodial services allocated first, how much is the amount of cafeteria allocated to assembly dept.?.
11. Assume that the company uses direct method of allocation, how much is the amount of custodial services allocated to cutting department? 12. Assume the company uses direct method of allocation, what is the overhead rate of the assembly department? 13. Assume the company uses step method of allocation, with custodial services allocated first, how much is the amount of cafeteria allocated to assembly dept.?.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:(Questions for 11-14). Spacer Co. has two operating departments and twq service
departments. Budgeted cost and activity in the various departments for last year are
shown below:
Custodial
Cutting Dept. Assembly Dept
P120,000
P200,000
4,000
75
10,000
Overhead Cost
Square ft. Occupied
Number of employees
Machine hours
5,000
100
15,000
Services
P50,400
500
10
Cafeteria
P28,000
1,000
15
Service department costs are allocated to operating departments; with the cost
of Custodial services allocated on the basis of square feet of space occupied and
the cost of the cafeteria on the basis of number of employees. Overhead rates of
the operating departments are computed based on machine hours.
11. Assume that the company uses direct method of allocation, how much is the
amount of custodial services allocated to cutting department?
12. Assume the company uses direct method of allocation, what is the overhead rate
of the assembly department?
13. Assume the company uses step method of allocation, with custodial services
allocated first, how much is the amount of cafeteria allocated to assembly dept.?.
14..Assume that company uses step-down method of allocation, with custodial
services allocated first, what is the overhead rate of the cutting department?
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