Sky Ltd. is a manufacturing company. The production process is divided into two production departments: Assembly and Finishing. There is one service department, the Stores department, which is used only by the Finishing department. The relevant information for the year ahead is as follows: Total Overheads for all the departments: Item Total (£) 300,000 200,000 500,000 Depreciation Rent TOTAL The following information is available about each department: Assembly Finishing Stores 70,000 25,000 5,000 Item Floor Space (m²) Value of machinery (£) Labour hours 85,000 2,000 15,000 500 Considering this information, which of the following statements is true? a. The Overheads Absorption Rate using labour hours for the Assembly department equals £210. b. The Overheads Absorption Rate using labour hours for the Finishing department equals £210. Oc. Total overheads allocated to the Assembly department equal £105,000 and total overheads allocated to the Finishing department equal £395,000. d. None of the answers is true.

Sky Ltd. is a manufacturing company. The production process is divided into two production departments: Assembly and Finishing. There is one service department, the Stores department, which is used only by the Finishing department. The relevant information for the year ahead is as follows: Total Overheads for all the departments: Item Total (£) 300,000 200,000 500,000 Depreciation Rent TOTAL The following information is available about each department: Assembly Finishing Stores 70,000 25,000 5,000 Item Floor Space (m²) Value of machinery (£) Labour hours 85,000 2,000 15,000 500 Considering this information, which of the following statements is true? a. The Overheads Absorption Rate using labour hours for the Assembly department equals £210. b. The Overheads Absorption Rate using labour hours for the Finishing department equals £210. Oc. Total overheads allocated to the Assembly department equal £105,000 and total overheads allocated to the Finishing department equal £395,000. d. None of the answers is true.

Name: Sky Ltd. is a manufacturing company. The production process is divide
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Description: Sky Ltd. is a manufacturing company. The production process is divided into two productiondepartments: Assembly and Finishing. There is one service department, the Stores department, which isused only by the Finishing department. The relevant inform

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...

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Cordner Corporation has two production departments, P1 and P2, and two service departments, S1 and S2. Direct costs for each department and the proportion of service costs used by the various departments for the month of July are as follows: Proportion of Services Used by: Department Direct costs S1 S2 P1 P2 S1 $ 71,000 0.60 0.10 0.30 S2 $111,000 0.10 0.40 0.50 P1 $171,000 P2 $151,000 Under the direct method of cost allocation, the amount of S1 costs allocated to S2 would be: Multiple Choice $0. $4,440. $11,100. $42,600.
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