Bagus Sdn Bhd (BSB) is an organization that offers a variety of plastic bottles for home use. BSBhas four (4) departments comprising two (2) service departments and two (2) productiondepartments. One (1) service department utilizes machine hours for cost allocation, while anotherservice department allocates its cost using number of employees. Costs information for the currentyear are based on the following data:MouldingRM33,2507,500AssemblyRM42,7505,000MaintenanceCafeteriaRM90,0003,000Overhead costRM52,000Machine hours9,500Number of employees152510Rahman, the newly employed staff of BSB, is given a responsibility to make the allocation usingthe step-down method. Rahman has allocated service department that incur the lowest costs firstto other departments.REQUIRED:(a)Comment on the Rahman practice in allocating service departments costs above.Allocate the service department costs to the production departments by using step- downmethod.(b)(c)List TWO (2) differences between direct method and reciprocal method.

The direct method apportions support-department costs straightforwardly to the producing offices…

Bagus Sdn Bhd (BSB) is an organization that offers a variety of plastic bottles for home use. BSB has four (4) departments comprising two (2) service departments and two (2) production departments. One (1) service department utilizes machine hours for cost allocation, while another service department allocates its cost using number of employees. Costs information for the current year are based on the following data: Moulding RM33,250 Assembly RM42,750 Maintenance RM52,000 Cafeteria RM90,000 3,000 Overhead cost Machine hours 7,500 5,000 9,500 Number of employees 15 25 10 9. Rahman, the newly employed staff of BSB, is given a responsibility to make the allocation using the step-down method. Rahman has allocated service department that incur the lowest costs first to other departments. REQUIRED: (a) Comment on the Rahman practice in allocating service departments costs above. (b) Allocate the service department costs to the production departments by using step- down method. (c) List TWO (2) differences between direct method and reciprocal method.

Bagus Sdn Bhd (BSB) is an organization that offers a variety of plastic bottles for home use. BSB has four (4) departments comprising two (2) service departments and two (2) production departments. One (1) service department utilizes machine hours for cost allocation, while another service department allocates its cost using number of employees. Costs information for the current year are based on the following data: Moulding RM33,250 Assembly RM42,750 Maintenance RM52,000 Cafeteria RM90,000 3,000 Overhead cost Machine hours 7,500 5,000 9,500 Number of employees 15 25 10 9. Rahman, the newly employed staff of BSB, is given a responsibility to make the allocation using the step-down method. Rahman has allocated service department that incur the lowest costs first to other departments. REQUIRED: (a) Comment on the Rahman practice in allocating service departments costs above. (b) Allocate the service department costs to the production departments by using step- down method. (c) List TWO (2) differences between direct method and reciprocal method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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