Blossom Company is a manufacturer of women’s and men’s swimsuits. The company us
ID: 2429572 • Letter: B
Question
Blossom Company is a manufacturer of women’s and men’s swimsuits. The company uses a dual-rate system to allocate support costs. Last year’s support departments’ fixed and variable costs are as follows:
Allocation base amounts for all the departments are as follows:
Use the following allocation bases for fixed support costs: direct costs for accounting, number of employees for human resources, and square metres for janitorial. Allocate fixed support costs using the direct method.
Departments
Departments
$
$
Human Accounting Resources Janitorial Total Variable costs $ 17,100 $ 20,200 $ 56,200 $ 93,500 Fixed costs 57,000 93,800 54,800 205,600 Total costs $ 74,100 $ 114,000 $ 111,000 $ 299,100Explanation / Answer
Solution:
Particulars Support Departments Operating Departments Total Accounting Human Resources Janitorial Women’s Men’s Direct Costs 849000 469000 1318000 % for allocation 64.42% 35.58% Employees 9 6 15 % for allocation 60.00% 40.00% Square metres 460 460 920 % for allocation 50.00% 50.00% Fixed support costs $57,000.00 $93,800.00 $54,800.00 $0.00 $0.00 $205,600.00 Allocations: Accounting -$57,000.00 $36,717.00 $20,283.00 $0.00 Human Resources -$93,800.00 $56,280.00 $37,520.00 $0.00 Janitorial -$54,800.00 $27,400.00 $27,400.00 $0.00 Total allocations $0.00 $0.00 $0.00 $120,397.00 $85,203.00 $205,600.00