Adelaide Manufacturing has the following overhead costs in their four departments.HR and Maintenance are the service departments,while Mixing and Fabricating are the production departments.There is currently $10 000 in HR overheads,$20 000 in Maintenance overheads,$30 000 in Mixing overheads and $40 000 in Fabricating overheads.
$\begin{array}{lllrr}
&\text { HR}& \text {Maintenance}&\text { Mixing}&\text { Fabricating }\
\text { Employees } & 20 & 60 & 50 & 150 \
\text { Machine hours } & 10 & 30 & 200 & 300
\end{array}$

HR overheads are allocated to production departments using number of employees,while Maintenance overheads are allocated to production departments using machine hours.The company has decided to use the direct method to allocate overhead costs to the production departments.
Required:
A.How much overhead is allocated to the production departments from the service departments?
B.What is the total overhead in the production departments after the re-allocation?

Question

Adelaide Manufacturing has the following overhead costs in their four departments.HR and Maintenance are the service departments,while Mixing and Fabricating are the production departments.There is currently $10 000 in HR overheads,$20 000 in Maintenance overheads,$30 000 in Mixing overheads and $40 000 in Fabricating overheads.
$\begin{array}{lllrr}
&\text { HR}& \text {Maintenance}&\text { Mixing}&\text { Fabricating }\
\text { Employees } & 20 & 60 & 50 & 150 \
\text { Machine hours } & 10 & 30 & 200 & 300
\end{array}$
 
HR overheads are allocated to production departments using number of employees,while Maintenance overheads are allocated to production departments using machine hours.The company has decided to use the direct method to allocate overhead costs to the production departments.
Required:
A.How much overhead is allocated to the production departments from the service departments?
B.What is the total overhead in the production departments after the re-allocation?

Quizplus · Accepted Answer

The Answer of Adelaide Manufacturing has the following overhead costs in their four departments.HR and Maintenance are the service departments,while Mixing and Fabricating are the production departments.There is currently $10 000 in HR overheads,$20 000 in Maintenance overheads,$30 000 in Mixing overheads and $40 000 in Fabricating overheads.
$\begin{array}{lllrr}
&\text { HR}& \text {Maintenance}&\text { Mixing}&\text { Fabricating }\
\text { Employees } & 20 & 60 & 50 & 150 \
\text { Machine hours } & 10 & 30 & 200 & 300
\end{array}$
 
HR overheads are allocated to production departments using number of employees,while Maintenance overheads are allocated to production departments using machine hours.The company has decided to use the direct method to allocate overhead costs to the production departments.
Required:
A.How much overhead is allocated to the production departments from the service departments?
B.What is the total overhead in the production departments after the re-allocation?

Adelaide Manufacturing Has the Following Overhead Costs in Their Four