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  • Book (7) Haha

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    Jasper Gica
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    The document shows three methods for allocating overhead costs: direct, step, and simultaneous. The direct method allocates overhead costs directly to departments. The step method first allocates service department costs and then production department costs. The simultaneous method solves for allocations to multiple departments simultaneously using equations.

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    Book (7)haha

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    The document shows three methods for allocating overhead costs: direct, step, and simultaneous. The direct method allocates overhead costs directly to departments. The step method first allocates service department costs and then production department costs. The simultaneous method solves for allocations to multiple departments simultaneously using equations.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    3 views1 page

    Book (7) Haha

    Uploaded by

    Jasper Gica
    The document shows three methods for allocating overhead costs: direct, step, and simultaneous. The direct method allocates overhead costs directly to departments. The step method first allocates service department costs and then production department costs. The simultaneous method solves for allocations to multiple departments simultaneously using equations.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    DIRECT METHOD Producing dept. Service dept.

    total machinery assembly Factory Administration Building Grounds


    budgeted OH 1,030,000.00 416,000.00 380,000.00 129,000.00 105,000.00
    Allocation:
    FA - 71,666.67 57,333.33 -129,000.00
    BG - 39,117.65 65,882.35 -105,000.00
    total budgeted OH 1,030,000.00 526,784.32 503,215.68
    divided by: 30,000.00 22,800.00
    OH or deptal rate 17.56 22.07
    per DLH per DLH

    STEP METHOD Producing dept. Service dept.


    total machinery assembly Factory Administration Building Grounds
    budgeted OH 1,030,000.00 416,000.00 380,000.00 129,000.00 105,000.00
    Allocation:
    FA - -129,000.00
    BG -
    total budgeted OH 1,030,000.00 416,000.00 380,000.00
    divided by: 30,000.00 22,800.00
    OH or deptal rate 13.87 16.67
    per MH per MH

    SIMULTANEOUS METHOD Producing dept. Service dept.


    total machinery assembly Factory Administration Building Grounds
    budgeted OH 1,030,000.00 416,000.00 380,000.00 129,000.00 105,000.00
    Allocation:
    FA - 47,906.19 38,324.96 -182,043.54 34,588.27
    BG - 60,559.28 53,043.54 -139,588.27
    total budgeted OH 1,030,000.00 524,465.47 427,906.19
    divided by: 30,000.00 22,800.00
    OH or deptal rate 17.48 18.77
    per MH per MH

    FA=129,000 + 38% BG
    BG= 105,000 + 19%FA

    FA= 129,0000 + 0.38(105,000 + .19FA)


    FA= 129,000 + 39,900 + 0.0722FA
    0.9278FA = 168,900
    FA= 182,043.54

    S= 105,000 + 19% (182,043.54)


    S= 139,588.27

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