Please work out step by step Problem #02: (50 points) Dods two producing departm
ID: 2548656 • Letter: P
Question
Please work out step by step
Problem #02: (50 points) Dods two producing departments (Pl and P2) and two support departments (S1 and costs incurred in support departments S1 and S2 are allocated to producing departments P1 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: on Company uses a job-order costing system to compute product costs There are S2). The Si S2 P1 P2 Direct department costs $1,200,000 $1,800,000 $7,000,000 $11,750,000 Number of employees 13 325 48 2,250 72 1,800 Direct labor hours Required: 1. Prepare a schedule allocating the support department costs to the 450 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 Pl 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, compute the bid price of Job A2 to be proposed to the customer (10 points)Explanation / Answer
Solution:-
1 & 2
S2 Dept O/H rate = 1800000/(450+2250+1800)= 400
S1 dept O/H rate = 1380000/(48+72) = 11500
(3.) Total cost of Job A2
2600000+(250*3756)+(100*7388)=4277800
S1 S2 P1 P2 Direct Dept Cost 1200000 1800000 7000000 11750000 Allocation cost of S2 Dept (400*450)=180000 (400*2250)=900000 400*1800=720000 Allocation cost of S1 Dept (11500*48)=552000 (11500*72)=828000 Total 8452000 13298000 Dept rate per direct lab hour (8452000/2250)=3756 (13298000/1800)=7388