Av-Y6 Company operates three service departments, administration, maintenance, and personnel and two production departments, assembly and packaging. Information for the three service departments is given below: Admin Maint Person Directly traced overhead $65,000 $33,000 $74,000 Square feet occupied 2,000 3,500 3,000 Number of employees 42 24 30 Maintenance hours 2,500 2,000 4,000 Information for the two production departments is given below: Assembly Packaging Directly traced overhead $167,030 $114,090 Square feet occupied 2,100 1,400 Number of employees 36 18 Maintenance hours 6,400 1,600 Direct labor hours 20,000 18,000 Machine hours 10,000 15,000 Av-Y6 Company uses the sequential method of allocation. Information on the allocation bases and activities for each department are given below. Administration department costs are allocated on the basis of square feet occupied, maintenance department costs are allocated on the basis of maintenance hours, and personnel department costs are allocated on the basis of number of employees. In the second stage, assembly department overhead costs are assigned to products based on machine hours. Calculate the amount of overhead allocated from the personnel department to the packaging department.
we shall first allocate cost to product department in sequence given
|Admin||Main||Person||Assembly||packaging||Total allocation base|
|Administration cost||22,750[3500/10,000]*65000||$19,500[3000/10000]*65000||square feet 10,000[3500+3000+2100+1400]|
|Total Maintenace cost to be allocated||$55,750[$33,000+22,750]|
|Main cost||$18,583[$55,750/12,000]*4000||Maintenance hours 12000[4000+6,400+1,600]|
|Total Personnel cost to be allocated||$112,083[$18,583+$19,500+$74,000]|
|Personnel cost||$37,361[18/54]*112,083||54 Number of employees [36+18]|
verhead allocated from the personnel department to the packaging department is $37,361
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