The Ladyfinger Manufacturing Company has two production departments (fabrication and assembly) and three service departments (factory administration, factory maintenance, and factory cafeteria). A summary of costs and other data for each department prior to allocation of service department costs for the year ended June 30, 2011, appears below. The costs of the factory administration department, factory maintenance department, and factory cafeteria department are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively. Factory Fabrication Assembly Administration Maintenance Factory Factory Cafeteria Actual Direct Labor Costs Actual Direct Materials Costs P1,950,000 P2.050,000 3,130,000 950,000 Estimated Factory OH Costs Before allocation Direct labor hours Number of employees Square footage occupied 1,650,000 1,850,000 P160,000 P203,200 27,000 8 P240,000 562,500 280 437,500 31,000 12 42,000 20 200 88,000 72,000 1,750 2,000 4,800 Assuming that Ladyfinger elects to distribute service department costs to other service departments, as well as the production departments (starting with the service department with the greatest total costs), determine the applied factory þverhead rate of Fabrication Department using direct labor hours of 562,500 as the basis.
The Ladyfinger Manufacturing Company has two production departments (fabrication and assembly) and three service departments (factory administration, factory maintenance, and factory cafeteria). A summary of costs and other data for each department prior to allocation of service department costs for the year ended June 30, 2011, appears below. The costs of the factory administration department, factory maintenance department, and factory cafeteria department are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively. Factory Fabrication Assembly Administration Maintenance Factory Factory Cafeteria Actual Direct Labor Costs Actual Direct Materials Costs P1,950,000 P2.050,000 3,130,000 950,000 Estimated Factory OH Costs Before allocation Direct labor hours Number of employees Square footage occupied 1,650,000 1,850,000 P160,000 P203,200 27,000 8 P240,000 562,500 280 437,500 31,000 12 42,000 20 200 88,000 72,000 1,750 2,000 4,800 Assuming that Ladyfinger elects to distribute service department costs to other service departments, as well as the production departments (starting with the service department with the greatest total costs), determine the applied factory þverhead rate of Fabrication Department using direct labor hours of 562,500 as the basis.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
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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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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:The Ladyfinger Manufacturing Company has two production departments (fabrication and assembly) and three
service departments (factory administration, factory maintenance, and factory cafeteria). A summary of costs
and other data for each department prior to allocation of service department costs for the year ended June 30,
2011, appears below. The costs of the factory administration department, factory maintenance department, and
factory cafeteria department are allocated on the basis of direct labor hours, square footage occupied, and
number of employees, respectively.
Factory
Fabrication Assembly Administration Maintenance
Factory
Factory
Cafeteria
Actual Direct Labor Costs
Actual Direct Materials Costs
P1,950,000 P2,050,000
3,130,000
950,000
Estimated Factory OH Costs
Before allocation
1,650,000
562,500
1,850,000
P160,000
P203,200
P240,000
Direct labor hours
Number of employees
Square footage occupied
437,500
31,000
27,000
42,000
20
280
200
12
8
88,000
72,000
1,750
2,000
4,800
Assuming that Ladyfinger elects to distribute service department costs to other service departments, as well as
the production departments (starting with the service department with the greatest total costs), determine the
applied factory þverhead rate of Fabrication Department using direct labor hours of 562,500 as the basis.
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