MANAGEMENT 122: CASE ASSIGNMENT 1
DSL Company has two manufacturing departments – the Machining Department and the Assembly Department. Each department has a different overhead cost driver – machine hours in the Machining Department and assembly labor hours in the Assembly Department. Different jobs need different amounts of machining and assembly resources. The company allocates Machining Department overhead costs using machine hours and Assembly Department overhead costs using labor hours.
WRITE THIS ESSAY FOR ME
Tell us about your assignment and we will find the best writer for your paper.
Get Help Now!Details of the company’s budgeted manufacturing overhead costs of $1,152,000 for 2016 are shown below:
| Support Departments | Operating Departments | ||||
| Engineering and | Materials | ||||
| Expense | Production Control | Management | Machining | Assembly | Total Budget |
| Supervisors Salary | 51,000 | 44,000 | 52,000 | 60,000 | 207,000 |
| Engineering salaries | 115,000 | 46,000 | 60,000 | 24,000 | 245,000 |
| Depreciation and maintenance | 41,000 | 55,000 | 79,000 | 20,000 | 195,000 |
| Indirect materials | 20,000 | 20,000 | 11,000 | 7,000 | 58,000 |
| Indirect labor | 43,000 | 63,000 | 44,000 | 45,000 | 195,000 |
| Rent, utilities and insurance | 16,000 | 24,000 | 64,000 | 48,000 | 152,000 |
| Plant admin | 24,000 | 20,000 | 26,000 | 30,000 | 100,000 |
| 310,000 | 272,000 | 336,000 | 234,000 | $1,152,000 | |
The Engineering Department supports all the engineering activity in the other departments. The Materials Department is responsible for managing and moving materials and components required for different jobs. Each job at the company is different and requires small quantities of unique components to be machined and assembled.
The overhead rate for the Machining Department is based upon 10,000 machine hours. The overhead rate for the Assembly Department is based upon 20,000 direct labor hours.
MANAGEMENT 122 SPRING 2016
The departmental costs and support percentages are shown below:
| Support Departments | Operating Departments | ||||||||
| Engineering | |||||||||
| and | |||||||||
| Production | Materials | ||||||||
| Control | Management | Machining | Assembly | Total Budget | |||||
| Overhead Budget before | |||||||||
| allocations | 310,000 | 272,000 | 336,000 | 234,000 | 1,152,000 | ||||
| Services Provided by: | |||||||||
| Engineering and Production Control | |||||||||
| Salaries | 36,000 | 60,000 | 24,000 | 120,000 | |||||
| Percentage | 30% | 50% | 20% | 100% | |||||
| Materials Management | |||||||||
| Labor Hours | 400 | 800 | 2,800 | 4,000 | |||||
| Percentage | 10% | 20% | 70% | 100% | |||||
| Activity Driver | 10,000 | 20,000 | |||||||
| Overhead Rate | 33.60 | 11.70 | |||||||
Assume the company has two service departments and their costs are recorded in these departments and are allocated to two production departments. All four departments share the same building. Each service department is an intermediate cost center whose costs are recorded as incurred and then distributed to other cost centers.
Requirements
Your group has been hired as consultants to the company. Prepare an analysis and letter to the president allocating the overhead costs and determining the total departmental costs and their respective overhead rates based upon the following methods:
- Direct method
- Step method
- Reciprocal method
Introducing our Online Essay Writing Services Agency, where you can confidently place orders for a wide range of academic assignments. Our reputable homework writing company specializes in crafting essays, term papers, research papers, capstone projects, movie reviews, presentations, annotated bibliographies, reaction papers, research proposals, discussions, and various other assignments. Rest assured, our content is guaranteed to be 100% original, as every piece is meticulously written from scratch. Say goodbye to concerns about plagiarism and trust us to deliver authentic and high-quality work.
WRITE MY ESSAY NOW
