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Charlie Manufacturing Company has two production departments, Melting and Molding. Direct general plant management and plant security costs benefit both production departments. Charlie allocates general plant management costs on the basis of the number of production employees and plant security costs on the basis of space occupied by the production departments. In November, the following overhead costs were recorded:

Melting Department direct overhead $350,000
Molding Department direct overhead 600,000
General plant management 180,000
Plant security 70,000

Melting Molding
Number of employees 50 90
Space occupied (square feet) 20,000 80,000
Machine hours 10,000 2,000
Direct labor hours 4,000 20,000

Required:
Prepare a schedule allocating general plant management costs and plant security costs to the Melting and Molding Departments.


Sagot :

Anthougoidn

Answer:

Charlie Manufacturing Company

A Schedule Allocating Service Costs to the Melting and Molding Departments:

                           General Plant     Plant      Melting       Molding     Total

                           Management   Security

Direct overhead    $180,000   $70,000  $350,000  $600,000  $1,200,000

General plant mgt  -180,000        0              64,286        115,714           0

Plant security                            -70,000        14,000       56,000           0

Total costs after   $0               $0            $428,286     $771,714  $1,200,000

Explanation:

a) Data and Calculations:

Overheads:

                           General Plant     Plant      Melting       Molding     Total

                           Management   Security

Direct overhead  $180,000     $70,000  $350,000  $600,000  $1,200,000

Number of employees                                         50              90                140

Space occupied (square feet)                     20,000       80,000        100,000

Machine hours                                              10,000         2,000          12,000

Direct labor hours                                          4,000       20,000         24,000

General plant mgt  -180,000        0             64,286       115,714           0

Plant security                            -70,000       14,000      56,000           0

General Plant management (Production Employees):

Melting = $64,286 ($180,000 * 50/140)

Molding = $115,714 ($180,000 * 90/140)

Plant Security (Space Occupied):

Melting = $14,000 ($70,000 * 20,000/100,000)

Molding = $56,000 ($70,000 * 80,000/100,000)

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