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RAV Manufacturing Company has two production departments (Fabrication and Assembly) and three service departments (General Factory Administration, Factory Maintenance, and Factory Cafeteria). A summary of the year's overhead costs and other data for each department prior to allocation of service department costs appears below: Fabrication Assembly Gen. Factory Factory Factory Administration Maintenance Cafeteria P 160,000 31,000 Overhead costs P 6,730,000 562,500 P 4,850,000 P 203,200 P 240,000 Direct labor hours 437,500 27,000 42,000 Number of employees 280 200 12 20 Square footage occupied 88,000 72,000 1,750 2,000 4,800 The costs of the General Factory Administration Department, Factory Maintenance Department, and Factory Cafeteria are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively. It is the company's policy that the order of distribution is based on the highest peso amount of costs originating in the service departments and the direct method is used.

RAV Manufacturing Company has two production departments (Fabrication and Assembly) and three service departments (General Factory Administration, Factory Maintenance, and Factory Cafeteria). A summary of the year's overhead costs and other data for each department prior to allocation of service department costs appears below: Fabrication Assembly Gen. Factory Factory Factory Administration Maintenance Cafeteria P 160,000 31,000 Overhead costs P 6,730,000 562,500 P 4,850,000 P 203,200 P 240,000 Direct labor hours 437,500 27,000 42,000 Number of employees 280 200 12 20 Square footage occupied 88,000 72,000 1,750 2,000 4,800 The costs of the General Factory Administration Department, Factory Maintenance Department, and Factory Cafeteria are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively. It is the company's policy that the order of distribution is based on the highest peso amount of costs originating in the service departments and the direct method is used.

Cornerstones of Cost Management (Cornerstones Series)
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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RAV Manufacturing Company has two production departments (Fabrication and Assembly) and three service departments (General Factory Administration, Factory Maintenance, and Factory Cafeteria). A summary of the year's overhead costs and other data for each department prior to allocation of service department costs appears below: Fabrication Assembly Gen. Factory Factory Factory Administration Maintenance Cafeteria Overhead costs P 6,730,000 P 160,000 P 240,000 P 4,850,000 437,500 P 203,200 27,000 Direct labor hours 562,500 31,000 42,000 Number of employees Square footage occupied 280 200 12 8. 20 88,000 72,000 1,750 2,000 4,800 The costs of the General Factory Administration Department, Factory Maintenance Department, and Factory Cafeteria are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively. It is the company's policy that the order of distribution is based on the highest peso amount of costs originating in the service departments and the direct method is used.
Transcribed Image Text:RAV Manufacturing Company has two production departments (Fabrication and Assembly) and three service departments (General Factory Administration, Factory Maintenance, and Factory Cafeteria). A summary of the year's overhead costs and other data for each department prior to allocation of service department costs appears below: Fabrication Assembly Gen. Factory Factory Factory Administration Maintenance Cafeteria Overhead costs P 6,730,000 P 160,000 P 240,000 P 4,850,000 437,500 P 203,200 27,000 Direct labor hours 562,500 31,000 42,000 Number of employees Square footage occupied 280 200 12 8. 20 88,000 72,000 1,750 2,000 4,800 The costs of the General Factory Administration Department, Factory Maintenance Department, and Factory Cafeteria are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively. It is the company's policy that the order of distribution is based on the highest peso amount of costs originating in the service departments and the direct method is used.
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