Richard Co. has two manufacturing departments, CC and EE and two service departments’ maintenance and warehouse. Richard Co., using direct method and ignores inter-service department work. With help of following information, calculate the total production overhead costs of Departments CC and EE using the direct method of Reapportionment: CC EE Maintenance Warehouse $ $ $ $ Allocated costs 16,100 30,100 13,000 6,000 General costs 72,190 50,230 24,140 14,000 Total 88,290 80,330 37,140 20,000 Service departments' services were used as follows. CC EE Maintenance Warehouse Total Maintenance hours used 6,000 5,100 – 800 11,900 Number of Warehouse requisitions 4,000 2,000 900 – 6,900
Richard Co. has two manufacturing departments, CC and EE and two service departments’
maintenance and warehouse. Richard Co., using direct method and ignores inter-service
department work. With help of following information, calculate the total production overhead
costs of Departments CC and EE using the direct method of Reapportionment:
CC EE Maintenance Warehouse
$ $ $ $
Allocated costs 16,100 30,100 13,000 6,000
General costs 72,190 50,230 24,140 14,000
Total 88,290 80,330 37,140 20,000
Service departments' services were used as follows.
CC EE Maintenance Warehouse Total
Maintenance hours used 6,000 5,100 – 800 11,900
Number of Warehouse
requisitions
4,000 2,000 900 – 6,900
3b. Star Co. produces a single product, “MM”, details of products are as follows.
Per unit $
Selling price 195.00
Direct materials 50.00
Direct labor 18.5
Variable
Budgeted Annual fixed production overheads are $1.52 million. The Star Co. anticipates to
manufacture 1,172,000 units of the MM each year. Actual overheads are $1.52 million for the year
and Overheads are absorbed on a per unit basis. Budgeted fixed selling costs are $316,000 per
quarter. Actual sales and production units for the third quarter of 2020 are given below.
July-September
Sales 237,500
Production 269,000
There is no opening inventory at the beginning of January. Prepare statements of profit & loss for
the quarter, using, Marginal costing OR Absorption costing.
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