Description
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Explanation & Answer
Attached.
PROBLEM 1
Particular
Cost incurred
Reallocation
of cost
maintenance
Reallocation
of cost of
cafeteria
Total
Basis of
allocation
3500:4000
Maintenance
Cafeteria
Cutting L
Packaging
50000
50000
45000
275000
23333
300000
26667
45000
16875
28125
0
315208
354792
150:250
0
A)
Maintenance cost allocated to cutting department = SAR23333
B)
Total cost for packaging department =SAR354792
C)
Criteria for selecting the method for allocating support Dep't overhead to the production
department
Service departments provide services only to production departments - Direct method
Support departments provide service to other service departments to e.g. Service departments
are x and y x provide service to y and operating departments department y only to operating
departments - Step method
At least two service departments they may render administration to one another and, there
these bury office administrations are to be given due weight while redistributing costs of
administration division - Reciprocal help strategy
PROBLEM 2
The net realizable met...