DB Week 5, Schultz

DB Week 5, Schultz - 04/10/2011 BUS5431 Managerial...

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04/10/2011 BUS5431 Managerial Accounting Week 5 Homework Chapter 6 Exercise 5 a. Service Department Allocation Base Human resources Number of employees Duplicating Number of pages copied Janitorial Floor space Accounting Number of sales transactions Graphic design Time spent on design work Food services Number of employees b.Under the direct method costs are not allocated between service departments. Thus, the Human Resource department would not receive a share of Food Services costs. Exercise 8 P1 has 200/500 = 40% of production department employees. P2 has 300/500 = 60% of production department employees. Service Service dept. Cost Allocated to Department Costs P1 P2 S1$4,000,000 $1,600,000 $2,400,000 S23,000,000 1,200,000 1,800,000 S3 2,000,000 800,000 1,200,000 Total cost$9,000,000 $3,600,000 $5,400,000 Exercise 9 a. The manufacturing overhead allocation includes $56 of fixed cost which will not increase if the special order is accepted. The incremental revenue and incremental costs associated with the order suggests that the company will be better off by $144,000 if the order is accepted.
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Incremental revenue (3,000 × $200) $600,000 Incremental costs Material (3,000
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DB Week 5, Schultz - 04/10/2011 BUS5431 Managerial...

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