CCT 3lal e-Heme .lid-Term Exam.docx Last za ed b uzer References Mailings Revie
ID: 2548284 • Letter: C
Question
CCT 3lal e-Heme .lid-Term Exam.docx Last za ed b uzer References Mailings Revie Help Dodson Company uses a job-order costing system to compute product costs. There are two producing departments (Pl and P2) and two support departments (S1 and S2). The costs incurred in support departments S1 and S2 are allocated to producing departments Pl and P2 and included in their factory overhead rates for costing jobs. S1 costs are allocated based on the number of employees while S2 costs are allocated based on direct labor hours. The production departments overhead rates are also computed based on direct labor hours. The data below are available for February 2018: S1 S2 Pi P2 Direct department costs $1,200,000 $1,800,000 $7,000,000 $11.750.000 Number of employees81348 72 Direct labor hours 450 325 2,250 1,800 Oequired 1. Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The department with the greatest percentage of interdepartmental services should be allocated first (15 points) 2. Determine the departmental rates per direct labor hour for P1 and P2 (round to the closest whole number): 10 points 3. Job A2 was ordered and completed during February at a prime cost of $2,600,000. In addition, this job required 250 direct labor hours in Department P1 and 100 direct labor hours in Department P2. What was the total cost of Job A2? 15 points 4. Assume that the company's policy is to price a job at 150% of cost,Explanation / Answer
Dodson Company S1 cost are allocated on the basis of Number of employees S2 cost are allocated on the basis of Direct Labor Hours Determination of % of allocation S1=13/(13+48+72) 9.77% S2=450/(450+2250+1800) 10.00% S2 is first allocated because greatest percentage of interdepartmental service should be allocated first S1 ,P1 and P2 S2 cost are allocated on the basis of Direct Labor Hours S1 P1 P2 Total Allocation Base(Direct Labor Hours) 450 2250 1800 4500 Percentage of base=(450/4500) for S1,(2250/4500) for P1,(1800/4500) for P2 10% 50% 40% 100% Allocation of S2 cost $ 180,000.00 $ 900,000.00 $ 720,000.00 $ 1,800,000.00 S1 cost are allocated on the basis of Number of Employees P1 P2 Total Allocation Base(Number of employees) 48 72 120 Percentage of base=(450/4500) for S1,(2250/4500) for P1,(1800/4500) for P2 40.00% 60.00% 100.00% Allocation of S2 cost =($1200000+180000) $ 552,000.00 $ 828,000.00 $ 1,380,000.00 Total cost S1 S2 P1 P2 Total 1) Department cost $ 1,200,000.00 $ 1,800,000.00 $ 7,000,000.00 $ 11,750,000.00 $ 21,750,000.00 Cost allocation of Depratment S2 cost $ 180,000.00 $ (1,800,000.00) $ 900,000.00 $ 720,000.00 $ - Cost allocation of Depratment S1 cost $ (1,380,000.00) $ 552,000.00 $ 828,000.00 $ - Cost after allocation $ - $ - $ 8,452,000.00 $ 13,298,000.00 $ 21,750,000.00 2) Departmental rate per direct labor hours for department P1 and P2 P1 P2 Total Cost $ 8,452,000.00 $ 13,298,000.00 Direct Labor Hours 2250 1800 Ovehead rate per direct labor hours $ 3,756.44 $ 7,387.78 3) Job A2 Cost Prime cost (Direct Material and Direct Labor) $ 2,600,000.00 P1 Department cost=(3756.44*250) $ 939,111.11 P2 department Cost=(7387.78*100) $ 738,777.78 Total cost of Job A2 $ 4,277,888.89 4) Price a job 150% of cost=($4277888.89*150%) $ 6,416,833.33