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ACCT Problem II Service Department Allocations

See attach file for the problem.

PROBLEM II
Second, Inc. has the following departmental cost summary:

__SD I__ _SD II_ _SD III _PD I__ _PDII_
Total Overhead cost $100,000 $20,000 $15,000

# Employees 64 136 24 400 440
Sq Ft Space 500 300 600 2000 2400
Labor Hours 3500 1500
Machine Hours 6500 3500

SD I COSTS ARE ALLOCATED FIRST ON THE BASIS OF NUMBER OF EMPLOYEES.
SDII COSTS ARE ALLOCATED SECOND ON THE BASIS OF FLOOR SPACE.
SDIII COSTS ARE ALLOCATED THIRD ON THE BASIS OF MACHINE HOURS.

REQUIRED: USING THE STEP MEHTOD (SHOW WORK ON WORK SHEET PROVIDED ON
PAGE 4.)

1. SD I COSTS ALLOCATED TO SD II _________________________

2. SD I COSTS ALLOCATED TO PD I _________________________

3. SD II COSTS ALLOCATED TO SD III _________________________

4. SD II COSTS ALLOCATED TO PD II _________________________

5. SD III COSTS ALLOCATED TO PD I _________________________

6. PD I COSTS ALLOCATED TO SD II _________________________

7. PD II COSTS ALLOCATED TO SD I _________________________

8. SD I COSTS ALLOCATED TO PD II _________________________

9. ASSUMING ALLOCATED COSTS ARE PRORATED ON THE BASIS OF LABOR HOURS

IN PD I, THE RATE PER LABOR HOURS IS _________________________

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I have completed the computations in Excel so you have a template for other similar problems. The formulas are in the cells (click on cell to see). I have added some hints about this process that avoid common errors.

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Solution Summary

I have completed the computations in Excel so you have a template for other similar problems. The formulas are in the cells (click on cell to see). I have added some hints about this process that avoid common errors.

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