Bagus Sdn Bhd (BSB) is an organization that offers a variety of plastic bottles for home use. BSB has four (4) departments comprising two (2) service departments and two (2) production departments. One (1) service department utilizes machine hours for cost allocation, while another service department allocates its cost using number of employees. Costs information for the current year are based on the following data: Moulding RM33,250 Assembly RM42,750 Maintenance RM52,000 Cafeteria RM90,000 3,000 Overhead cost Machine hours 7,500 5,000 9,500 Number of employees 15 25 10 9. Rahman, the newly employed staff of BSB, is given a responsibility to make the allocation using the step-down method. Rahman has allocated service department that incur the lowest costs first to other departments. REQUIRED: (a) Comment on the Rahman practice in allocating service departments costs above. (b) Allocate the service department costs to the production departments by using step- down method. (c) List TWO (2) differences between direct method and reciprocal method.
Bagus Sdn Bhd (BSB) is an organization that offers a variety of plastic bottles for home use. BSB has four (4) departments comprising two (2) service departments and two (2) production departments. One (1) service department utilizes machine hours for cost allocation, while another service department allocates its cost using number of employees. Costs information for the current year are based on the following data: Moulding RM33,250 Assembly RM42,750 Maintenance RM52,000 Cafeteria RM90,000 3,000 Overhead cost Machine hours 7,500 5,000 9,500 Number of employees 15 25 10 9. Rahman, the newly employed staff of BSB, is given a responsibility to make the allocation using the step-down method. Rahman has allocated service department that incur the lowest costs first to other departments. REQUIRED: (a) Comment on the Rahman practice in allocating service departments costs above. (b) Allocate the service department costs to the production departments by using step- down method. (c) List TWO (2) differences between direct method and reciprocal method.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 5E: Crystal Scarves Co. produces winter scarves. The scarves are produced in the Cutting and Sewing...
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