Hang 10 Manufacturers has two service departments, Factory Administration and Maintenance and two producing departments, A and B. Selected information relating to these departments are as follows: Service Departments Producing Departments Factory Administration Maintenance A B Number of employees 30 50 400 550 Total labour hours 4 000 6 000 80 000 120 000 Overhead costs R600 000 R500 000 R1 700 000 R2 400 000 Hang 10 Manufacturers allocates service department costs using the step method. Costs of Factory Administration are allocated on the basis of the number of employees. Costs of Maintenance are allocated on the basis of labour hours. Allocation begins with the Factory Administration Department.
Hang 10 Manufacturers has two service departments, Factory Administration and Maintenance and two producing departments, A and B. Selected information relating to these departments are as follows: Service Departments Producing Departments Factory Administration Maintenance A B Number of employees 30 50 400 550 Total labour hours 4 000 6 000 80 000 120 000 Overhead costs R600 000 R500 000 R1 700 000 R2 400 000 Hang 10 Manufacturers allocates service department costs using the step method. Costs of Factory Administration are allocated on the basis of the number of employees. Costs of Maintenance are allocated on the basis of labour hours. Allocation begins with the Factory Administration Department.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hang 10 Manufacturers has two service departments, Factory Administration and Maintenance and two producing departments, A and B. Selected information relating to these departments are as follows:
|
|
Service Departments |
Producing Departments |
||
|
|
Factory Administration |
Maintenance |
A |
B |
|
Number of employees |
30 |
50 |
400 |
550 |
|
Total labour hours |
4 000 |
6 000 |
80 000 |
120 000 |
|
|
R600 000 |
R500 000 |
R1 700 000 |
R2 400 000 |
Hang 10 Manufacturers allocates service department costs using the step method. Costs of Factory Administration are allocated on the basis of the number of employees. Costs of Maintenance are allocated on the basis of labour hours.
Allocation begins with the Factory Administration Department.
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