2, Dual - rate method

Budgeted fixed-cost rate per gift $ 0.99

Budgeted variable-cost rate per gift $ 0.35
Budgeted total-cost rate per gift $ 1.34
Variable
Department Fixed costs
costs Total costs
Giftware 990 420 1,410 c, Budgeted rate based on the practical capaci
Women's Apparel 842 228 1,069 Budgeted fixed-cost rate per gift
Fragrances 990 315 1,305 Budgeted variable-cost rate per gift
Men's Apparel 743 158 900 Budgeted total-cost rate per gift
Domestics 891 280 1,171

Department
Total 4,455 1,400 5,855
Giftware
Women's Apparel
Fragrances
Men's Apparel
Domestics
Total
 Budgeted
Department
Items Wrapped
Giftware 1,000
Women's Apparel 850
Fragrances 1,000
Men's Apparel 750
Domestics 900
Total 4,500

Practical capacity
Budgeted fixed costs
Budgeted variable costs per item
Department budgeted to wrap

1, Single - rate method

a, Allocate costs based on the budgeted use and ac
Budgeted fixed cost rate per gift-wrap
Budgeted variable cost rate per gift-wrap
Budgeted rate

Budgeted
Department
Items Wrapped
ted rate based on the practical capacity Giftware 1,450.0
d fixed-cost rate per gift $ 0.99 Women's Apparel 1,232.5
d variable-cost rate per gift $ 0.35 Fragrances 1,450.0
d total-cost rate per gift $ 1.34 Men's Apparel 1,087.5
Domestics 1,305.0
Actual
Items
Wrapped Total 6,525.0
1,608
871
1,206
603
1,072
5,360
 Actual Items
Wrapped
1,200
650
900
450
800
4,000

5,000 gifts
$ 4,950 each month
$ 0.35
4,500 gifts

n the budgeted use and actual usage

per gift-wrap $ 1.10
te per gift-wrap $ 0.35
$ 1.45

Actual Items
Wrapped
1,740.0
942.5
1,305.0
652.5
1,160.0

5,800.0
1, Direct method
Support dept Costs X Y
A 210,000 131,250 78,750

B 90,000 22,500 67,500

Total 153,750 146,250
2, Step-down method
A first A B X Y
Costs to be allocated 210,000 90,000
Allocate A (210,000) 42,000 105,000 63,000
Allocate B (132,000) 33,000 99,000
Total - - 138,000 162,000

B first A B X Y
Costs to be allocated 210,000 90,000
Allocate B (90,000*750)/1.250 (90,000) (90,000*125)/1,250 (90,000*375)/1,250
Allocate A (264,000) (264,000*500)/800 (264,000*300)/800
Total 174,000 126,000

3, Reciprocal method A B X Y
Costs to be allocated 210,000 90,000
Allocate A (300,000) 300,000*0.2 300,000*0.5 300,000*0.3
Allocate B 150,000*0.6 (150,000) 150,000*0.1 150,000*0.3
Total - - 165,000 135,000
Budgeted costs of the operating departments X $ 1,250,000
Y $ 950,000
Used by
Supplied by A B X Y Total
A 200 500 300 1,000
B 750 125 375 1,250
1/5 1/2 2/7
3/5 0.10 2/7
 a, Direct method A B X Y
Budgeted OH costs $ 210,000 $ 90,000
Allocation of A (5/8; 3/8) (210,000) 131,250 78,750
Allocation of B (125/500;
375/500) (90,000) 22,500 67,500
Total - - 153,750 146,250

b, Step-dowm method (Allocate department A first)

A B X Y
Budgeted OH costs $ 210,000 $ 90,000
Allocation of A (210,000) 42,000 105,000 63,000
Allocation of B (132,000) 33,000 99,000
Total - - 138,000 162,000
c, Step-dowm method (Allocate department B first)
A B X Y
Budgeted OH costs $ 210,000 $ 90,000
Allocation of B 54,000 (90,000) 9,000 27,000
Allocation of A (264,000) 165,000 99,000
Total - - 174,000 126,000

d, Reciprocal method
- Let A = Total costs of Materials Handing
- Let B = Total costs of Power Generation
A = $210,000 + 3/5B -> A = 300,000
B = $$90,000 + 1/5A -> B = 150,000

A B X Y
Budgeted OH costs $ 210,000 $ 90,000
Allocation of A (300,000) 60,000 150,000 90,000
Allocation of B 90,000 (150,000) 15,000 45,000
Total - - 165,000 135,000
2, Dual - rate method

Fixed costs Variable costs

Manufacturing
(practical (expected Total
department
capacity) monthly usage)

Livonia 3,520 1,200 4,720

Warren 4,840 1,000 5,840
Dearborn 5,060 800 5,860
Westland 4,180 1,000 5,180
Total 17,600 4,000 21,600

Dual-rate method is a better allocation method (more accurate). Cuz fixed costs result
mostly from the use of capacity (practical level). Variable costs are associated with the
monthly uasge (dung nguyen nhan phat sinh chi phi phan bo thi no se chinh xac hon)
 Manufacturing Needed at practical Average Expected
department Capacity Production Monthly Usage
Level (Kilowatt-Hours) (Kilowatt-Hours)
Livonia 16,000 12,000
Warren 22,000 10,000
Dearborn 23,000 8,000
Westland 19,000 10,000
Total 80,000 40,000

Budgeted operating costs $ 21,600 Total cost pool

Budgeted variable costs $ 4,000
Budgeted Fixed costs $ 17,600
1, Single cost pool
b, Based on
a, Based on practical capacity expected monthly
usage
Budgeted fixed costs rate per kilowatt-hour $ 0.22 $ 0.44
Budgeted variable costs rate per kilowatt-hour $ 0.05 $ 0.10
Budgeted total costs rate (cost rate per KWh) $ 0.27 $ 0.54

Manufacturing Needed at practical Average Expected

department Capacity Production Monthly Usage
Level (Kilowatt-Hours) (Kilowatt-Hours)
Livonia 4,320 6,480
Warren 5,940 5,400
Dearborn 6,210 4,320
Westland 5,130 5,400
Total 21,600 21,600

costs result
ated with the
 Costs of truck fleet
Number of round-trips for dark
chocolate division (Wisconsin)
Number of round-trips for milk
chocolate division (Louisiana)
Total number of round-trips
Practical capacity
1, Single - rate method

a, Budgeted rate per round-trip

b, Budgeted rate per round-trip

c, Budgeted rate per round-trip

2, - If budgeted rate and budgeted quantity/usage is used, costs are

known with certainty. User department can determine the amount of
support service used. There is no incentive for user departments to
control their consumption of support services.
- If budgeted rate and actual quantity/usage is used, user departments know
the cost rate. They can control costs by reducing the number of trips.
- If actual rate and actual quantity/usage is used, user departments have to
wait until year end in order to know the cost. Can not control comsumption
in advance.

(dễ dàng trong việc tính toán vì tôi đã biết chắc chăn rồi đã đc pbo 69k cho dark va 46k cho milk
-> chả có động cơ gì để dùng ít hơn
-milk dùng ít hơn nên tiết kiệm đc chi phí và tăng lợi nhuận lên vì dùng có 15 roundtrip
- ưu điểm là xát với thwujc tế, chi phí ít hơn, khi sang kỳ tiếp theo họ lại k biết đc chi phí thực tế là bao nhiêu
-> k kiểm soát đc chi phí sẽ phân bổ là bao nhiêu ngoại trừ chờ đợi tổng cuối cùng là bao nhiêu
=> phương pháp thwu2 là hiệu quả hơn vì họ đánh giá được hiểu quả hđ của từng bộ phận
 Budgeted Actual
$ 115,000 $ 96,750

30 30

20 15
50 45
50 round-trips

a, Budgeted b, Actual c, Actual

2,300 Roundtrip roundtrip roundtrip
Number of round-
trips for dark
chocolate division
2,300 (Wisconsin) 69,000 69,000 64,500
Number of round-
trips for milk
chocolate division
2,150 (Louisiana) 46,000 34,500 32,250
Total 115,000 103,500 96,750

ế là bao nhiêu
2, GOVT CORP
Direct 1,120,000 1,880,000
Step down (AS first) 1,090,000 1,910,000
IS first 1,168,000 1,832,000
- Direct method ignores service to other support departments. Step down method

partially recognizes service to other support departments.

- If AS is allocated first, costs to be allocated to IS will be higher because they include
a portion of AS costs. Corp Department that uses more of IS service will be allocated more
cost, resulting in higher total costs of $1,910,000
- If IS is allocated first, costs to be allocated to AS will be higher because they include a
portion of IS costs. Govt department that uses more of AS service will be allocated more cost
resulting in higher total costs of $1,168,000
3,
- A popular approach is to choose the support department that renders the highest proportion

of total services to other support departments. => 1. IS ($2,400,000), 2. AS ($600,000)

Let AS = the total costs of AS department

Let IS = the total costs of IS department
 SUPPORT OPERATING
AS IS GOVT CORP
Budgeted OH costs before
any interdepartment
cost allocations $ 600,000 $ 2,400,000 $ 8,756,000 $ 12,452,000
Support work supplied by
AS (budgeted head count) - 25% 40% 35%
Support work supplied by
IS (budgeted computer
time) 10% - 30% 60%
1. a, Direct method
SUPPORT OPERATING
AS IS GOVT CORP
Budgeted OH costs before
any interdepartment
cost allocations $ 600,000 $ 2,400,000
Allocation of AS (600,000) 320,000 280,000
Allocation of IS (2,400,000) 800,000 1,600,000
Total - - 1,120,000 1,880,000

b, Step-down method (allocate AS first)

SUPPORT OPERATING
AS IS GOVT CORP
Budgeted OH costs before
any interdepartment
cost allocations $ 600,000 $ 2,400,000
Allocation of AS (600,000) 150,000 240,000 210,000
Allocation of IS (2,550,000) 850,000 1,700,000
Total - - 1,090,000 1,910,000

c, Step-down method (allocate IS first)

SUPPORT OPERATING
AS IS GOVT CORP
Budgeted OH costs before
any interdepartment
cost allocations $ 600,000 $ 2,400,000
Allocation of IS 240,000 (2,400,000) 720,000 1,440,000
Allocation of AS (840,000) 448,000 392,000
Total - - 1,168,000 1,832,000

1, Reciprocal method
AS = $600,000 + 0.1 IS 0.1 -> AS = $ 861,538
IS = $2,400,000 + 0.25 AS 0.25 -> IS = $ 2,615,385

SUPPORT OPERATING
AS IS GOVT CORP
Budgeted OH costs before
 any interdepartment
cost allocations $ 600,000 $ 2,400,000
Allocation of AS (861,538) 215,385 344,615 301,538
Allocation of IS 261,538.5 (2,615,385) 784,616 1,569,231
Total - - 1,129,231 1,870,769

2, pp cuoi cung chinh xac hon, gan voi direct method, va nam giua 2 step down
TOTAL

$ 24,208,000

100%

100%
3, Step 1: HR provides 23.077% of its services to information systems:

21/(21+42+28) 23.077%
This 23.077% of $72,700 HR department costs is $16,777.

Step 2: Information systems provides 8.333% of its services to HR:

320/(320+1,920+1,600) 8.333%
This 8.333% of $234,400 information systems department costs is $19,533.
 SUPPORT OPERATING
DEPARTMENTS DEPARTMENTS
Human Information Corporate Consumer
Resources Systems Sales Sales
Budgeted costs incurred before any
interdepartment cost allocations $ 72,700 $ 234,400 $ 998,270 $ 489,860
Support work supplied by human
resources department
Budgeted number of employees - 21 42 28
Support work supplied by
information systems department
Budgeted processing time (in
minutes) 320 - 1,920 1,600
1, Allocate the support departments' cost to theSUPPORT
operating departments using the direct method
OPERATING
DEPARTMENTS DEPARTMENTS
Human Information Corporate Consumer
Resources Systems Sales Sales
Budgeted costs incurred before any
interdepartment cost allocations $ 72,700 $ 234,400
Allocation of human resources
department (72,700) 43,620 29,080
Allocation of information systems
department (234,400) 127,855 106,545
Total - - 171,475 135,625
2, Step - down method SUPPORT OPERATING
DEPARTMENTS DEPARTMENTS
Human Information Corporate Consumer
HR first Resources Systems Sales Sales
Budgeted costs incurred before any
interdepartment cost allocations $ 72,700 $ 234,400
Allocation of human resources
department (72,700) 16,777 33,554 22,369
Allocation of information systems
department (251,177) 137,006 114,171
Total - - 170,559 136,541

- Let HR = Total costs of human resources department

- Let IS = Total costs of informantion systems department
-> HR = $72,700 + 1/12IS HR = $ 94,042
-> IS = $234,400 + 3/13HR IS = $ 256,102
SUPPORT OPERATING
DEPARTMENTS DEPARTMENTS
Human Information Corporate Consumer
Resources Systems Sales Sales
Budgeted costs incurred before any
interdepartment cost allocations $ 72,700 $ 234,400
Allocation of human resources
department (94,042) 21,702 43,404 28,936
Allocation of information systems
department 21,342 (256,102) 128,051 106,709
Total (0) - 171,455 135,645
 91

3,840