Support Department Cost Allocation
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Support Department Cost Allocation. CHAPTER. Objectives. 1. Describe the difference between support departments and producing departments. 2. Calculate single and multiple changing rates for a support department.

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Support Department Cost Allocation

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Support Department Cost Allocation

CHAPTER


Objectives

1.Describe the difference between support departments and producing departments.

2.Calculate single and multiple changing rates for a support department.

3.Allocate support-department costs to producing departments using the direct, sequential, and reciprocal methods.

4.Calculate departmental overhead rates.

After studying this chapter, you should be able to:


Types of Departments

Producing departments secara langsung bertanggung jawab pada pembuatan produk atau jasa yang dijual kepelanggan


Types of Departments

Supporting departments menyediakan pelayanan pendukung yang diperlukan oleh departemen produksi

Pemeliharaan, pertamanan, permesinan, rumah tangga, personalia dan penyimpanan


Langkah-langkah dalam pengalokasian biaya dept pendukung ke dept produksi

1.Membagi perusahaan kedalam departemen-depatemen

2.Mengklasifikasikan tiap departemen sebagai pendukung atau departemen produksi

3.Menelusuri semua biaya overhead perusahaan di departemen pendukung atau departemen produksi

4.Mengalokasikan biaya dept pendukung ke dept produksi

Continued


Langkah-langkah dalam pengalokasian biaya dept pendukung ke dept produksi

5.Menghitung tarif overhead yang ditentukan terlebih dahulu untuk departemen produksi

6.Mengalokasikan biaya overhead ke tiap unit produk melalui tarif overhead yang ditentukan terlebih dahulu


Examples of Cost Drivers forSupport Departments

Support Department Possible Driver

AccountingNumber of transactions

Cafeteria Number of employees

Engineering Number of change orders

MaintenanceMachine hours; maintenance hours

PayrollNumber of employees

Personnel Number of employees, firings, layoffs, new hires


Tujuan Alokasi

  • 1.Memperoleh harga yang wajar dan saling menguntungkan

  • 2.Menghitung tngkat laba lini produk

  • 3.Memperkirakan pengaruh ekonomi dari perencanan dan pengendalian

  • 4.Menilai persediaan

  • 5.Memotivasi para manajer


Note Objective 5: Allocations can be used to motivate managers.


AND

Barry

Hamilton

Fixed costs………………$26,190

Variable costs…..$0.023 per page


Variable cost: 270,000 x $0.023 $ 6,210

Fixed cost 26,190

Total cost for 270,000 pages$32,400

A Single Charge Rate

  • Estimated usage (in pages) by the three producing departments is as follows:

    • Audit Department94,500

    • Tax Department67,500

    • MAS Department108,000

    • Total270,000

Barry

Hamilton

Average cost ($32,400 ÷ 270,000)$0.12 per page


A Single Charge Rate

Total Photocopying Department Charge

Number of Pages

Charge per Page

Total Charges

x

=

Audit Department92,000$0.12$11,040

Tax Department65,0000.127,800

MAS Department115,0000.12 13,800

Total272,000$32,640


Multiple Charging Rates

Amount Allocated to Each Department

Peak Number of Pages

Proportion of Peak Usage

Total Fixed Costs

Audit7,8750.20$26,190$ 5,238

Tax22,5000.5726,19014,928

MAS 9,0000.2326,190 6,024

Total39,375$26,190


Multiple Charging Rates

Number of Pages x $0.023

Fixed Cost Allocation

Total Charges

+

=

Audit department$2,116$ 5,238$ 7,354

Tax department1,49514,92816,423

MAS department 2,645 6,024 8,669

Total$6,256$26,190$32,446


Budgeted Versus Actual Usage

  • Ketika kita kita mengalokasikan biaya dept pendukung kedept produksi, seharusnya kita mengalokasikan biaya aktual atau biaya yang dianggarkan?


Budgeted Versus Actual Usage

Biaya yang dianggarkan


Budgeted Versus Actual Usage

Prinsip umum evaluasi kinerja adalah para menajer seharusnya tidak bertanggung jawab atas biaya atau aktivitas yang tidak dikendalikan oleh mereka


Use of Budgeted Data for Product Costing

Total Rate

Allocated Charges

Number of Copies

x

=

Audit Department94,500$0.12$11,340

Tax Department67,5000.128,100

MAS Department108,000 0.12 12,960

Total270,000$32,400


Use of Actual Data for Performance Evaluation Purposes

Total Rate

Allocated Charges

Number of Copies

x

=

Audit department92,000$0.12$11,040

Tax department65,0000.127,800

MAS department115,000 0.12 13,800

Total272,000$32,640


Memilih metode alokasi biaya departemen pendukung

  • Ada tiga metode untuk mengalokasikan biaya dept pendukung ke departemen produksi:

  • The Direct Method (metode alokasi langsung)

  • The Sequential Method (metode alokasi berurutan)

  • The Reciprocal Method (metode alokasi timbal balik)


Data for Illustrating Allocation Methods

  • Support Departments Producing Departments

  • Direct costs*$250,000$160,000$100,000$ 60,000

  • Normal activity:

  • Kilowatt-hours-----200,000600,000200,000

  • Maintenance hours1,000-----4,5004,500

  • *Pada dept produksi biaya langsung hanya berhubungan dengan biaya overhead yang secara langsung dapat ditelusuri ke dept tersebut

Power Maintenance Grinding Assembly


Maintenance

Direct Method of Allocation

Power

Grinding

Assembly


Maintenance

Grinding

Direct Method of Allocation

Power

Assembly


0.75

600,000

(600,000 + 200,000)

Power =

200,000

(600,000 + 200,000)

4,500

(4,500 + 4,500)

0.25

4,500

(4,500 + 4,500)

Maintenance =

0.50

0.50

STEP 1—CALCULATE ALLOCATION RATIOS

Grinding Assembly

Direct Method


STEP 2—ALLOCATE SUPPORTS DEPARTMENT COSTS USING THE ALLOCATION RATIOS

Support Departments Producing Departments

Power Maintenance Grading Assembly

Direct costs$250,000 $160,000$100,000$ 60,000

Power-250,000---187,50062,500

Maintenance ----160,000 80,000 80,000

$ 0$ 0$367,500$202,500

a

b

a

0.75 x $250,000 = $187,500; 0.25 x $250,000 = $62,500

0.50 x $160,000 = $80,000

b

Direct Method


2

1

Power

Maintenance

Sequential Method of Allocation

STEP 1: Rank service departments


Sequential Method of Allocation

STEP 2

Power

Maintenance

Grinding

Assembly


Sequential Method of Allocation

STEP 2

Maintenance

Grinding

Assembly


600,000

(200,000 + 600,000 + 200,000)

0.60

STEP 1—CALCULATE ALLOCATION RATIOS

Maint. Grinding Assembly

200,000

(200,000 + 600,000 + 200,000)

0.20

0.20

Power =

Sequential Method


Mainte- nance

4,500

(4,500 + 4,500)

=

0.50

4,500

(4,500 + 4,500)

0.50

STEP 1—CALCULATE ALLOCATION RATIOS

Maint. Grinding Assembly

Sequential Method


STEP 2—ALLOCATE SUPPORT DEPARTMENT COSTS USING THE ALLOCATION RATIOS

Support Departments Producing Departments

Power Maintenance Grading Assembly

Direct costs$250,000 $160,000$100,000$ 60,000

Power-250,00050,000150,00050,000

Maintenance ----210,000 105,000 105,000

$ 0$ 0$355,000$215,000

a

b

a

0.20 x $250,000 = $50,000; 0.60 x $250,000 = $150,000;

0.20 x $250,000 = $50,000

0.50 x $210,000 = $105,000

b

Sequential Method


Reciprocal Method

  • Metode alokasi timbal balik mengakui semua interaksi antar departemen pendukung


Reciprocal Method

Support Departments Producing Departments

Power Maintenance Grading Assembly

Direct costs:

Normal activity:

Kilowatt-hours---200,000600,000200,000

Maintenance

hours1,000---4,5004,500

Proportion of Output Used by Departments

Power Maintenance Grading Assembly

Allocated ratios:

Power---0.200.600.20

Maintenance0.10---0.450.45


Reciprocal Method

M = Direct costs + Share of Power’s costs

M = $160,000 + $50,000 + 0.02M

0.98M = $210,000

M = $214,286


P =

Direct cost + Share of Maintenance’s cost

=

=

$250,000 + $21,429

$271,429

P

= $250,000 + 0.1($214,286)

P

P

Reciprocal Method


ALLOCATE SUPPORT DEPARTMENT COSTS USING THE ALLOCATION RATIOS AND THE SUPPORT-DEPARTMENT COSTS FROM RECIPROCAL METHODS EQUATIONS

Support Departments Producing Departments

Power Maintenance Grading Assembly

Direct costs$250,000 $160,000$100,000$ 60,000

Power-271,42954,286162,85754,286

Maintenance 271,429-214,286 96,429 96,429

Total$ 0$ 0$359,286$210,715

from Slide 7-35

from Slide 7-34


Comparison of Support Department Cost Allocations Using the Direct, Sequential, and Reciprocal Methods

Direct Method

Grinding Assembly

Direct costs$100,000$ 60,000

Allocated from power187,50062,500

Allocated from maintenance 80,000 80,000

Total cost$367,500$202,500

Click on button to compare with sequential method

Return to show

Click on button to compare with reciprocal method


Comparison of Support Department Cost Allocations Using the Direct, Sequential, and Reciprocal Methods

Sequential Method

Grinding Assembly

Direct costs$100,000$ 60,000

Allocated from power150,00050,000

Allocated from maintenance 105,000 105,000

Total cost$355,000$215,000

Click on button to compare with direct method

Return to show

Click on button to compare with reciprocal method


Comparison of Support Department Cost Allocations Using the Direct, Sequential, and Reciprocal Methods

Reciprocal Method

Grinding Assembly

Direct costs$100,000$ 60,000

Allocated from power162,85754,286

Allocated from maintenance 96,429 96,429

Total cost$359,286$210,715

Click on button to compare with direct method

Return to show

Click on button to compare with sequential method


Departmental Overhead Rates

  • The overhead rate for the grinding department is computed as follows (assuming the normal level of activity is 71,000 MH):

  • OH rate = $355,000  71,000 = $5 per MH

  • The overhead rate for the assembly department is computed as follows (assuming the normal level of activity is 107,500 DLH):

  • OH rate = $215,000  107,500 = $2 per DLH


Overhead cost assigned:

2 x $5$10

1 x $2 2

Total assigned$12

Product Unit Cost

A product requires two machine hours of grinding per unit and one hour of assembly.


Chapter Seven

The End


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