Scaffolder Ltd. is a manufacturing company making construction items. The production process is divided into two production departments, Assembly and Finishing. There is one service department, the Stores department, which is used by both the Assembly and the Finishing departments. The relevant information for the year ahead is as follows: Indirect Costs for All Three Departments in Total: Item Total £ Maintenance 40,000 Rent 80,000 Depreciation 500,000 TOTAL 620,000 The following information is available about each department: Item Assembly (£) Finishing (£) Stores (£) Floor Space (sq meters) 40,000 45,000 15,000 Value of machinery (£) 160,000 20,000 20,000 Maintenance hours 3,000 2,000 Stores requisitions 2,000 3,000 After allocating the indirect costs to the Assembly, Finishing and Stores departments using a suitable method for each department and reallocating the service department costs over production departments, which are the total costs for each department? O a. Total costs for the assembly department equal to £56,000, for the finishing department equal to £52,000 and for the Stores Department equal to £12,000. O b. Total costs for the assembly department equal to £456,000, for the finishing department equal to £102,000 and for the Stores Department equal to £62,000. O c. None of the answers provided are correct O d. Total costs for the assembly department equal to £480,800, for the finishing department equal to £139,200 and for the Stores Department equal to £0. O e. Total costs for the assembly department equal to £620,000, for the finishing department equal to £480,800 and for the Stores Department equal to £0.
Scaffolder Ltd. is a manufacturing company making construction items. The production process is divided into two production departments, Assembly and Finishing. There is one service department, the Stores department, which is used by both the Assembly and the Finishing departments. The relevant information for the year ahead is as follows: Indirect Costs for All Three Departments in Total: Item Total £ Maintenance 40,000 Rent 80,000 Depreciation 500,000 TOTAL 620,000 The following information is available about each department: Item Assembly (£) Finishing (£) Stores (£) Floor Space (sq meters) 40,000 45,000 15,000 Value of machinery (£) 160,000 20,000 20,000 Maintenance hours 3,000 2,000 Stores requisitions 2,000 3,000 After allocating the indirect costs to the Assembly, Finishing and Stores departments using a suitable method for each department and reallocating the service department costs over production departments, which are the total costs for each department? O a. Total costs for the assembly department equal to £56,000, for the finishing department equal to £52,000 and for the Stores Department equal to £12,000. O b. Total costs for the assembly department equal to £456,000, for the finishing department equal to £102,000 and for the Stores Department equal to £62,000. O c. None of the answers provided are correct O d. Total costs for the assembly department equal to £480,800, for the finishing department equal to £139,200 and for the Stores Department equal to £0. O e. Total costs for the assembly department equal to £620,000, for the finishing department equal to £480,800 and for the Stores Department equal to £0.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Scaffolder Ltd. is a manufacturing company making construction items. The production process is divided
into two production departments, Assembly and Finishing. There is one service department, the Stores
department, which is used by both the Assembly and the Finishing departments. The relevant
information for the year ahead is as follows:
Indirect Costs for All Three Departments in Total:
Item
Total £
Maintenance
40,000
Rent
80,000
Depreciation
500,000
TOTAL
620,000
The following information is available about each department:
Item
Assembly (£) Finishing (£)
Stores (£)
Floor Space (sq meters)
40,000
45,000
15,000
Value of machinery (£)
160,000
20,000
20,000
Maintenance hours
3,000
2,000
Stores requisitions
2,000
3,000
After allocating the indirect costs to the Assembly, Finishing and Stores departments using a suitable
method for each department and reallocating the service department costs over production
departments, which are the total costs for each department?
O a. Total costs for the assembly department equal to £56,000, for the finishing department equal to
£52,000 and for the Stores Department equal to £12,000.
O b.
Total costs for the assembly department equal to £456,000, for the finishing department equal to
£102,000 and for the Stores Department equal to £62,000.
O c.
None of the answers provided are correct
O d. Total costs for the assembly department equal to £480,800, for the finishing department equal to
£139,200 and for the Stores Department equal to £0.
O e. Total costs for the assembly department equal to £620,000, for the finishing department equal to
£480,800 and for the Stores Department equal to £0.
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