Cost Allocation

Question 1

Total cost =

Answer 1

DM + DL + Allocation of OH

Question 2

Actual costing

Answer 2

Allocates indirect costs based on Actual indirect cost x actual quantity’s of CAB
Actual allocation rate (AR) = actual total OH / actual total lvl of CAB

Question 3

Normal costing

Answer 3

Allocated indirect costs based on budgeted indirect cost rates x actual quantitys of CAB
Budgeted allocation rate (BR) = budgeted total OH / budgeted total lvl of CAB

Question 4

For both normal and actual costing use:

Answer 4

Actual DM and actual DL

Question 5

ABC costing steps:

Answer 5

Identify and classify activity’s
Identify cost driver
Compute the activity based OH rate for each cost
Allocate OH costs to products.

Question 6

Two steps for ABC wo tables:

Answer 6

Estimated OH / expected use of driver per activity = activity based OH rates

Expected use of cost drivers per product x activity based OH rates = cost allocated

Question 7

ABC 1 table

Answer 7

See sheet

Question 8

ABC 2 table

Answer 8

See sheet

Question 9

ABC 3 table

Answer 9

See sheet

Question 10

ABC 4 tables

Answer 10

See sheet

Question 11

Direct method table

Answer 11

See sheet

Question 12

Step down method calculations

Answer 12

Power for maintenance = maintenance KWH / (maintenance KWH + grinding KWH + assembly KWH)

Maintenance for power = power hrs / (power hrs + grinding hrs + assembly hrs)

Question 13

Step down tables

Answer 13

See sheet

Question 14

Reciprocal services equations

Answer 14

Total reciprocated costs = DC + allocated costs

P = power costs + maintenance for power *M

M = maintancne costs + power for maintenance *P

Question 15

Reciprocal services equations

Answer 15

Total reciprocated costs = DC + allocated costs

P = power costs + maintenance for power *M

M = maintancne costs + power for maintenance *P

Question 16

Reciprocal table

Answer 16

See sheet

Question 17

Reciprocal table

Answer 17

See sheet