work_at_home_soultions_ch12[1]

work_at_home_soultions_ch12[1] - ,Tracing,andAllocation...

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Chapter 12 Cost Accumulation, Tracing, and Allocation Exercise 12-1 Step 1 is to determine the allocation rate: Fringe benefit cost $370,000 Allocation rate = –––––––––––––––––––– = ––––––––––– = $7,400 per employee No. of employees 50 (Cost driver) Step 2 is to assign the cost by multiplying the allocation rate by the weight of the base (i.e., cost driver) for each divi- sion: Division Allocation Rate x Weight of Base = Allocated Cost A $7,400 x 38 = $281,200 B $7,400 x 12 = 88,800 Total allocated cost $370,000 Exercise 12-2 a. Items Direct Cost Indirect Cost Cost of building permits X Materials used in commercial construction projects X Depreciation on home building equipment (small tools such  as hammers or saws) X Company president’s salary X Depreciation crane used in commercial construction X Depreciation on home office building X Salary of corporate office manager X Wages of workers assigned to a specific construction pro- ject X Supplies used by the Commercial Construction Division X Labor on a particular house X 12-1
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Salary of the supervisor of commercial construction projects X Supplies, such as glue and nails, used by the Home Con- struction Division X Exercise 12-2 (continued) b. Items Direct Cost Indirect Cost Cost of building permits X Materials used in commercial construction projects X Depreciation on home building equipment (small tools such  as hammers or saws) X Company president’s salary X Depreciation crane used in commercial construction X Depreciation on home office building X Salary of corporate office manager X Wages of workers assigned to a specific construction pro- ject X Supplies used by the Commercial Construction Division X Labor on a particular house X Salary of the supervisor of commercial construction projects X Supplies, such as glue and nails, used by the Home Con- struction Division X c. Items Direct Cost Indirect Cost Cost of building permits X Materials used in commercial construction projects X Depreciation on home building equipment (small tools such  12-2
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as hammers or saws) X Company president’s salary X Depreciation crane used in commercial construction X Depreciation on home office building X Salary of corporate office manager X Salary of worker assigned to a specific construction project X Supplies used by the Commercial Construction Division X Labor on a particular house X Salary of the supervisor of commercial construction projects X Supplies, such as glue and nails, used by the Home Con- struction Division X Exercise 12-3 a. Step 1 is to determine the allocation rate: Allocation rate Overhead cost $576,000 for = ––––––––––––––––––– = ––––––––––– = $48 per DL hour
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work_at_home_soultions_ch12[1] - ,Tracing,andAllocation...

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