Please answer complete question   please answer within the format by providing formula the detailed working Please provide answer in text (Without image) Please provide answer in text (Without image) Please provide answer in text (Without image)     Sunflower Company has budgeted the following costs of the various department in the company: Factory administrative $ 270,000,000 Surveillance services 68,760,000 Personnel 28,840,000 Maintenance 45,200,000 Machining – Overhead 376,300,000 Assembly - Overhead 175,900,000 Total 965,000,000   Machining and Assembly are production departments; the other departments are service departments. Factory administrative costs are allocated based on total labour hours; Surveillance Services costs based space occupied; Personnel costs based on number of employees and Maintenance cost based on machine hours. The company allocated the service department costs to another department according to the following steps: Department No. of employees Total labour hours Space occupied (square feet) Total direct labour (hours) Machine Hours Factory administrative 12 - 5,000 - - Surveillance services 4 3,000 2,000 - - Personnel 5 5,000 3,000 - - Maintenance 25 22,000 10,000 - - Machining – Overhead 40 30,000 70,000 20,000 70,000 Assembly - Overhead 60 90,000 20,000 80,000 10,000 Total 146 150,000 110,000 100,000 80,000 Required (Preferably using Excel) : a) Calculate the single plant wide overhead rate using direct labour hours as basis of allocation. b) Allocate service departments costs to production departments using direct method. c) Allocate service departments costs to production departments using step method. d) Explain why step method provides a better overhead rate calculation compared to direct method.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Please answer complete question

 


please answer within the format by providing formula the detailed working
Please provide answer in text (Without image)
Please provide answer in text (Without image)
Please provide answer in text (Without image)

 

 


Sunflower Company has budgeted the following costs of the various department in the company:

Factory administrative $ 270,000,000
Surveillance services 68,760,000
Personnel 28,840,000
Maintenance 45,200,000
Machining – Overhead 376,300,000
Assembly - Overhead 175,900,000
Total 965,000,000

 

Machining and Assembly are production departments; the other departments are service departments. Factory administrative costs are allocated based on total labour hours; Surveillance Services costs based space occupied; Personnel costs based on number of employees and Maintenance cost based on machine hours. The company allocated the service department costs to another department according to the following steps:

Department

No. of

employees

Total labour

hours

Space occupied

(square feet)

Total direct

labour (hours)

Machine Hours
Factory administrative 12 - 5,000 - -
Surveillance services 4 3,000 2,000 - -
Personnel 5 5,000 3,000 - -
Maintenance 25 22,000 10,000 - -
Machining – Overhead 40 30,000 70,000 20,000 70,000
Assembly - Overhead 60 90,000 20,000 80,000 10,000
Total 146 150,000 110,000 100,000 80,000

Required (Preferably using Excel) :
a) Calculate the single plant wide overhead rate using direct labour hours as basis of allocation.

b) Allocate service departments costs to production departments using direct method.

c) Allocate service departments costs to production departments using step method.

d) Explain why step method provides a better overhead rate calculation compared to direct method.

Expert Solution
steps

Step by step

Solved in 5 steps with 1 images

Blurred answer
Knowledge Booster
Cost classification
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education