FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Salvador Apparel Company in Barcelona, Spain, has three production departments and two service departments. The overhead-per-month analysis sheet provides the following totals of the
Departments Overheads
Men’s wear production department € 48,000
Women’s wear production department 42,000
Children’s wear production department 30,000
Marketing service department 14,040
Delivery service department 18,000
€152,040
The expenses of the service departments are apportioned as follows:
Production departments Service departments
Men’s Women’s Children’s Marketing Delivery
Marketing 20% 40% 30% — 10%
Delivery 40% 20% 20% 20% —
Instruction
Use following methods to allocate service departments’ costs:
- Direct allocation (20%)
- Step-down allocation (30%)
- Reciprocal allocation (50%)
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