Example.3. X, Y and Z have two production departments and three service departments. Expenses incurred for these departments and other available information is given below. Particulars Prod. Prod. Service Dept. Service Service Dept. Dept. A Dept. B Maintenance Dept. Power Personnel As per Primary 1,20,000 1,50,000 20,000 48,000 40,000 Distribution Allocation Basis Maintenance 80 20 40 20 — Hours KWH Consumed 4 16 2 2 — Number of 60 30 30 18 Employees Allocate the cost of service departments to the production departments. Solution: Statement showing the allocation of service department’s cost to production departments. Direct Method:- Particulars Prod. Prod. Service Dept. Service Dept. Service Dept. Total Dept. A Dept. B Maintenance Power Personnel As per Primary 1,20,000 1,50,000 20,000 48,000 40,000 3,78,000 Distribution Maintenance 16,000 4,000 (20,000) (Maintenance Hrs ) ( Kwh 9,600 38,400 (48,000) Consumed) Personnel (No. 26,667 13,333 (40,000) of employees) Total Costs 1,72,267 2,05,733 3,78,000 Allocated
Example.3. X, Y and Z have two production departments and three service departments. Expenses incurred for these departments and other available information is given below. Particulars Prod. Dept. A Prod. Dept. B Service Dept. Maintenance Service Dept. Power Service Dept. Personnel As per Primary Distribution 1,20,000 1,50,000 20,000 48,000 40,000 Allocation Basis Maintenance Hours 80 20 — 40 20 KWH Consumed 4 16 2 — 2 Number of Employees 60 30 30 18 Allocate the cost of service departments to the production departments. Solution: Statement showing the allocation of service department’s cost to production departments. Direct Method:- Particulars Prod. Dept. A Prod. Dept. B Service Dept. Maintenance Service Dept. Power Service Dept. Personnel Total As per Primary Distribution 1,20,000 1,50,000 20,000 48,000 40,000 3,78,000 Maintenance (Maintenance Hrs ) 16,000 4,000 (20,000) ( Kwh Consumed) 9,600 38,400 (48,000) Personnel (No. of employees) 26,667 13,333 (40,000) Total Costs Allocated 1,72,267 2,05,733 3,78,000
cost_accounting_chapter_5_0.docx