Management of XYZ Media has decided to allocate the costs of the paper's two service/support departments (administration and human resources) to the two revenue generating/producing departments (advertising and circulation.) Administration costs are to be allocated on the Pesos of Assets Employed. ; Human Resources costs are to be allocated on the basis of Number of Employees. The following costs and allocated bases are available. (Convert the fractions on the allocated bases into percentages rounded to the whole number). Department - Administration: Direct Costs - P781,500 Number of Employees - 10 Pesos of Assets Employed - P387,100 Department - Human Resources: Direct Costs - P492,700 Number of Employees - 7 Pesos of Assets Employed - P291,700 Department - Advertising: Direct Costs - P957,800 Number of Employees - 12 Pesos of Assets Employed - P762,400 Department - Circulation: Direct Costs - P1,352,600 Number of Employees - 25 Pesos of Assets Employed - P1,870,300 Requirements: 1. Using the direct method, what are the total costs of the revenue generating departments after allocating the costs of the support departments? (Advertising P? - Circulation P?) 2. Assuming that the benefits provided in the data, using the step method to allocate the support department costs to the revenue generating departments, what are the total costs of the revenue generating departments after the allocations? (Advertising P? - Circulation P?)
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.
Management of XYZ Media has decided to allocate the costs of the paper's two service/support departments (administration and human resources) to the two revenue generating/producing departments (advertising and circulation.) Administration costs are to be allocated on the Pesos of Assets Employed. ; Human Resources costs are to be allocated on the basis of Number of Employees. The following costs and allocated bases are available. (Convert the fractions on the allocated bases into percentages rounded to the whole number).
Department - Administration:
Direct Costs - P781,500
Number of Employees - 10
Pesos of Assets Employed - P387,100
Department - Human Resources:
Direct Costs - P492,700
Number of Employees - 7
Pesos of Assets Employed - P291,700
Department - Advertising:
Direct Costs - P957,800
Number of Employees - 12
Pesos of Assets Employed - P762,400
Department - Circulation:
Direct Costs - P1,352,600
Number of Employees - 25
Pesos of Assets Employed - P1,870,300
Requirements:
1. Using the direct method, what are the total costs of the revenue generating departments after allocating the costs of the support departments? (Advertising P? - Circulation P?)
2. Assuming that the benefits provided in the data, using the step method to allocate the support department costs to the revenue generating departments, what are the total costs of the revenue generating departments after the allocations? (Advertising P? - Circulation P?)
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