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Cost Accumulation and allocation

Maller Manufacturing Company makes two different products, M and N. The company's two departments are named after the products; for example, Product M is made in Department M. Maller's accountant has identified the following annual costs associated with these two products.

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Required:
1. Identify the costs that are (1) direct costs of Department M, (2) direct costs of Department N, and (3) indirect costs.

2. Select the appropriate cost drivers for the indirect costs and allocate these costs to Department M and N.

3. Determine the total estimated cost of the products made in Department M and N. Assume that Maller produced 2,000 units of Product M and 4,000 units of Product N during the year. If Maller prices its products at cost plus 40 percent of cost, what price per unit must it charge for Product M and for Product N?

Please help. Thank you

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Solution Summary

The solution explains how to determine the direct and indirect costs and how to allocate the indirect costs

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