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1. Assume that Advanced Electronics allocates the costs of support departments to manufacturing
departments using the reciprocal method.
a. Calculate the manufacturing overhead rates for the Parts and Assembly departments.
Stage 3:
Cost driver
DMH (30 x 2000) 60,000
DLH (40 x 2000) 80,000
Overhead rate per
hour (total overhead
÷ cost driver) $13.65 $11.02
1
Alternatively:
Used By
Supplied by Materials Power Parts Assembly
Materials (direct labour hours) - 50% ≈42% ≈8%
(41.66667%) (8.33333%)
Power (kilowatt-hours) 40% 0% 40% 20%
Please note that if you round off to the nearest %, you will get some slightly different answers
as bolded and underlined in red below (unless you use an excel spreadsheet of course!):
Stage 3:
Cost driver
DMH (30 x 2000) 60,000
DLH (40 x 2000) 80,000
Overhead rate per
hour (total overhead
÷ cost driver) $13.66 $11.01
b. Calculate the manufacturing overhead costs allocated to notebooks and tablets given the following
additional information:
Notebooks Tablets
Actual MHs provided by Parts 26,400 39,600
2. Assume that Advanced Electronics allocates the costs of supports department to manufacturing
departments using the step-down method. Calculate the support department costs allocated to
each manufacturing department.
2
Alternatively:
Used By
Supplied by Materials Power Parts Assembly
Materials (direct labour hours) - 50% ≈42% ≈8%
(41.66667%) (8.33333%)
Power (kilowatt-hours) 40% 0% 40% 20%
Please note that if you round off to the nearest %, you will get some slightly different answers
as bolded and underlined in red below (unless you use an excel spreadsheet of course!):