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I. Allocation of Service Department Costs - Direct and Indirect Method Walk and Jog Co. Produces Backpacks, Tents and Sleeping Bags. produced in a separate production centers. department, which buys nylon, aluminum tubing and other items, and a small Engineering department, which also does R&D and quality control work. Each is The company also has a Purchasing Major items of production overhead expenses for month of November and its cost drivers are shown below. The cost of purchasing and engineering departments are allocated to the three production departments on the basis of supplies usage and of direct hours, respectively. Rent Expense Heating costs Electricity Indirect labor Supplies Cost P 60,000 30,000 50,000 105,000 90,000 Cost Driver Square footage Cubic feet Metered usage Factory payroll Supplies usage Cost Centers Square feet Cubic feet Meter usage Factory payroll Direct labor hours Supplies usage Backpacks Tents 800 7,300 250 Sleeping bags Purchasing Engineering 650 5,200 125 P120,000 500 P37,500 1,100 9,900 200 1,000 9,000 150 45-0 3,600 75 P100,000 600 P12,500 P70,000 850 P7,500 P10,000 P95,000 990 P55,000 260 P22,500 Required: Calculate the overhead rate per direct labor hours for each production departments when allocation of service departments is done using: a. Direct method b. Step=down method

I. Allocation of Service Department Costs - Direct and Indirect Method Walk and Jog Co. Produces Backpacks, Tents and Sleeping Bags. produced in a separate production centers. department, which buys nylon, aluminum tubing and other items, and a small Engineering department, which also does R&D and quality control work. Each is The company also has a Purchasing Major items of production overhead expenses for month of November and its cost drivers are shown below. The cost of purchasing and engineering departments are allocated to the three production departments on the basis of supplies usage and of direct hours, respectively. Rent Expense Heating costs Electricity Indirect labor Supplies Cost P 60,000 30,000 50,000 105,000 90,000 Cost Driver Square footage Cubic feet Metered usage Factory payroll Supplies usage Cost Centers Square feet Cubic feet Meter usage Factory payroll Direct labor hours Supplies usage Backpacks Tents 800 7,300 250 Sleeping bags Purchasing Engineering 650 5,200 125 P120,000 500 P37,500 1,100 9,900 200 1,000 9,000 150 45-0 3,600 75 P100,000 600 P12,500 P70,000 850 P7,500 P10,000 P95,000 990 P55,000 260 P22,500 Required: Calculate the overhead rate per direct labor hours for each production departments when allocation of service departments is done using: a. Direct method b. Step=down method

Managerial Accounting
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
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I. Allocation of Service Department Costs - Direct and Indirect Method Walk and Jog Co. Produces Backpacks, Tents and Sleeping Bags. produced in a separate production centers. department, which buys nylon, aluminum tubing and other items, and a small Engineering department, which also does R&D and quality control work. Each is The company also has a Purchasing Major items of production overhead expenses for month of November and its cost drivers are shown below. The cost of purchasing and engineering departments are allocated to the three production departments on the basis of supplies usage and of direct hours, respectively. Rent Expense Heating costs Electricity Indirect labor Cost P 60,000 30,000 50,000 105,000 90,000 Cost Driver Square footage Cubic feet Metered usage Factory payroll Supplies usage Supplies Cost Centers Backpacks Tents 1,100 9,900 200 Sleeping bags Purchasing 1,000 9,000 150 Engineering 650 Square feet Cubic feet Meter usage 45-0 3,600 75 800 7,300 250 P100,000 600 P12,500 5,200 125 P120,000 500 P37,500 Factory payroll Direct labor hours P70,000 850 P95,000 990 P55,000 260 Supplies usage P7,500 P10,000 P22,500 Required: Calculate the overhead rate per direct labor hours for each production departments when allocation of service departments is done using: a. Direct method b. Step=down method
Transcribed Image Text:I. Allocation of Service Department Costs - Direct and Indirect Method Walk and Jog Co. Produces Backpacks, Tents and Sleeping Bags. produced in a separate production centers. department, which buys nylon, aluminum tubing and other items, and a small Engineering department, which also does R&D and quality control work. Each is The company also has a Purchasing Major items of production overhead expenses for month of November and its cost drivers are shown below. The cost of purchasing and engineering departments are allocated to the three production departments on the basis of supplies usage and of direct hours, respectively. Rent Expense Heating costs Electricity Indirect labor Cost P 60,000 30,000 50,000 105,000 90,000 Cost Driver Square footage Cubic feet Metered usage Factory payroll Supplies usage Supplies Cost Centers Backpacks Tents 1,100 9,900 200 Sleeping bags Purchasing 1,000 9,000 150 Engineering 650 Square feet Cubic feet Meter usage 45-0 3,600 75 800 7,300 250 P100,000 600 P12,500 5,200 125 P120,000 500 P37,500 Factory payroll Direct labor hours P70,000 850 P95,000 990 P55,000 260 Supplies usage P7,500 P10,000 P22,500 Required: Calculate the overhead rate per direct labor hours for each production departments when allocation of service departments is done using: a. Direct method b. Step=down method
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