Please answer complete question please answer within the format by providing formula the detailed working Please provide answer in text (Without image) Please provide answer in text (Without image) Please provide answer in text (Without image) Sunflower Company has budgeted the following costs of the various department in the company: Factory administrative $ 270,000,000 Surveillance services 68,760,000 Personnel 28,840,000 Maintenance 45,200,000 Machining – Overhead 376,300,000 Assembly - Overhead 175,900,000 Total 965,000,000 Machining and Assembly are production departments; the other departments are service departments. Factory administrative costs are allocated based on total labour hours; Surveillance Services costs based space occupied; Personnel costs based on number of employees and Maintenance cost based on machine hours. The company allocated the service department costs to another department according to the following steps: Department No. of employees Total labour hours Space occupied (square feet) Total direct labour (hours) Machine Hours Factory administrative 12 - 5,000 - - Surveillance services 4 3,000 2,000 - - Personnel 5 5,000 3,000 - - Maintenance 25 22,000 10,000 - - Machining – Overhead 40 30,000 70,000 20,000 70,000 Assembly - Overhead 60 90,000 20,000 80,000 10,000 Total 146 150,000 110,000 100,000 80,000 Required (Preferably using Excel) : a) Calculate the single plant wide overhead rate using direct labour hours as basis of allocation. b) Allocate service departments costs to production departments using direct method. c) Allocate service departments costs to production departments using step method. d) Explain why step method provides a better overhead rate calculation compared to direct method.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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Please answer complete question

please answer within the format by providing formula the detailed working
Please provide answer in text (Without image)
Please provide answer in text (Without image)
Please provide answer in text (Without image)

Sunflower Company has budgeted the following costs of the various department in the company:

Factory administrative	$ 270,000,000
Surveillance services	68,760,000
Personnel	28,840,000
Maintenance	45,200,000
Machining – Overhead	376,300,000
Assembly - Overhead	175,900,000
Total	965,000,000

Machining and Assembly are production departments; the other departments are service departments. Factory administrative costs are allocated based on total labour hours; Surveillance Services costs based space occupied; Personnel costs based on number of employees and Maintenance cost based on machine hours. The company allocated the service department costs to another department according to the following steps:

Department	No. of employees	Total labour hours	Space occupied (square feet)	Total direct labour (hours)	Machine Hours
Factory administrative	12	-	5,000	-	-
Surveillance services	4	3,000	2,000	-	-
Personnel	5	5,000	3,000	-	-
Maintenance	25	22,000	10,000	-	-
Machining – Overhead	40	30,000	70,000	20,000	70,000
Assembly - Overhead	60	90,000	20,000	80,000	10,000
Total	146	150,000	110,000	100,000	80,000

Required (Preferably using Excel) :
a) Calculate the single plant wide overhead rate using direct labour hours as basis of allocation.

b) Allocate service departments costs to production departments using direct method.

c) Allocate service departments costs to production departments using step method.

d) Explain why step method provides a better overhead rate calculation compared to direct method.

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