Townsville Manufacturing has the following overhead costs in their four departments.Quality Control and Maintenance are the service departments,while Mixing and Fabricating are the production departments.There is currently $40 000 in Quality Control overheads,$70 000 in Maintenance overheads,$80 000 in Mixing overheads and $100 000 in Fabricating overheads.
$\begin{array}{lllrr}
&\text { Quality control }& \text {Maintenance}&\text { Mixing}&\text { Fabricating }\
\text { Inspections } & 20 & 100 &125 & 125 \
\text { Machine hours } & 100 & 30 & 200 &300
\end{array}$

Quality Control overheads are allocated to production departments using the number of inspections,while Maintenance overheads are allocated to production departments using machine hours.The company has decided to use the step-down method to allocate overhead costs to the production departments.The Quality Control department is allocated first.
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

Townsville Manufacturing has the following overhead costs in their four departments.Quality Control and Maintenance are the service departments,while Mixing and Fabricating are the production departments.There is currently $40 000 in Quality Control overheads,$70 000 in Maintenance overheads,$80 000 in Mixing overheads and $100 000 in Fabricating overheads.
 $\begin{array}{lllrr}
&\text { Quality control }& \text {Maintenance}&\text { Mixing}&\text { Fabricating }\
\text { Inspections  } & 20 & 100 &125 & 125 \
\text { Machine hours } & 100 & 30 & 200 &300
\end{array}$
 
Quality Control overheads are allocated to production departments using the number of inspections,while Maintenance overheads are allocated to production departments using machine hours.The company has decided to use the step-down method to allocate overhead costs to the production departments.The Quality Control department is allocated first.
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 Townsville Manufacturing has the following overhead costs in their four departments.Quality Control and Maintenance are the service departments,while Mixing and Fabricating are the production departments.There is currently $40 000 in Quality Control overheads,$70 000 in Maintenance overheads,$80 000 in Mixing overheads and $100 000 in Fabricating overheads.
 $\begin{array}{lllrr}
&\text { Quality control }& \text {Maintenance}&\text { Mixing}&\text { Fabricating }\
\text { Inspections  } & 20 & 100 &125 & 125 \
\text { Machine hours } & 100 & 30 & 200 &300
\end{array}$
 
Quality Control overheads are allocated to production departments using the number of inspections,while Maintenance overheads are allocated to production departments using machine hours.The company has decided to use the step-down method to allocate overhead costs to the production departments.The Quality Control department is allocated first.
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?

Townsville Manufacturing Has the Following Overhead Costs in Their Four