198909 Total support costs allocation Total support costs allocation Carleton Company has two service department and two production departments.
a) a product-cost object b) a driver c) an activity d) a department cost object Ans: b) a driver Question 32: Newton Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments
World Airlines has three service departments: (1) ticketing, (2) baggage handling, and (3) engine maintenance.
Chicago Company: Activity-Based Costing (ABC) vs Traditional Costing Systems, allocation base for the indirect manufacturing cost
The controller of Chicago Company is in charge of installing a new costing system that includes the allocation of indirect manufacturing costs to the producing departments.
Second Solution: Allocate the overhead costs on a basis that is acceptable to both residential and commercial departments. Overhead costs are a major cost element in the company.
198728 Western Wood Products cost drivers: single or two part rate method Western Wood Products cost drivers: single or two part rate method Western Wood Product has two production departments: cutting and assembly.
Explain why Gonzalez Company uses two different cost driver rates in its job costing system. The reason for using different cost drivers for two departments is that there are different causal relations for manufacturing support costs.
Overhead costs are not treated as a single item; rather, costs are pooled by manufacturing departments and allocated using different cost drivers. Hence, this approach is more reliable.
Job costs are categorized as direct materials, direct labor, and service overhead; costs are categorized as design, installation, and service costs.
Explains how to allocate the costs of two Service Department (Cafeteria and Repairs) to the two Production Departments that utilize these services. 2. The Direct Method of Cost Allocation is used in this scenario.